Tcsditcinf2022d5 en

UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT
Study conducted with the financial support

of the Enhanced Integrated Framework
Feasibility study on the development of cotton by-products in Malawi
© 2022, United Nations Conference on Trade and Development
The findings, interpretations and conclusions expressed herein are those of the authors and
do not necessarily reflect the views of the United Nations or its officials or Member States.
The designations employed and the presentation of material on any map in this work do not
imply the expression of any opinion whatsoever on the part of the United Nations concerning
the legal status of any country, territory, city or area or of its authorities, or concerning the
delimitation of its frontiers or boundaries.
This publication has not been formally edited.
UNCTAD/TCS/DITC/INF/2022/5
ii
Acknowledgments
This feasibility study on the development of cotton by-products in Malawi was
prepared by Mavuto Tembo, independent consultant, under the supervision of
Mr. Tansuğ Ok, Economic Affairs Officer, Commodities Branch, UNCTAD, and the
overall guidance of Mr. Janvier Nkurunziza, Officer-in-Charge of the Commodities
Branch at UNCTAD. The project team wishes to express their profound gratitude to
Ms. Christina Zakeyo, Principal Secretary of Trade at the Ministry of Industry and Trade
(MoIT), and Mr. Cuthbert Wadonda Chirwa, Chief Economist at MoIT, for their support
during the implementation of the project. The report benefited from the inputs of
50 stakeholders representing both the public and private sectors who participated in a
national validation workshop in Lilongwe on 8 March 2022. UNCTAD wishes to thank
the members of the validation workshop bureau, Mr. Godwin Nyirongo,
Mr. Phillip Banda, and Mr. Synowden Mbalafana, as well as the respondents to survey
questionnaires, participants in Focus Group Discussions, and all individuals who
granted bilateral interviews in Lilongwe and Salima in March 2022. Desktop publishing
was prepared by Danièle Boglio and the cover was designed by Ms. Nadège Hadjemian.
Funding for this report was kindly provided by the Enhanced Integrated Framework
(EIF), a core partner of the WTO-UNCTAD-ITC Joint Initiative on cotton by-products.
Contact:
UNCTAD
Division on International Trade and Commodities
Commodities Branch
Palais des Nations
1211 Geneva 10, Switzerland
https://unctad.org/topic/commodities
Tel.: +41 22 917 6286
commodities@unctad.org
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Table of contents
1.1 Background ............................................................................................................................... 1

1.2 Objectives and methodology.................................................................................................. 3
2.1 Key institutions involved in cotton production....................................................................... 6

2.2 Smallholder farmers ................................................................................................................ 8
2.3 Ginners, oil seed crushers and textile manufacturers ....................................................... 11
2.4 Policy environment ................................................................................................................ 13
3.1 Seed cotton production trends ............................................................................................. 16

3.2 Cotton yields ........................................................................................................................... 17
3.3 Extension services ................................................................................................................. 19
3.4 Analysis of seed cotton market ............................................................................................. 20
3.5 Seed cotton minimum price formula .................................................................................... 22
3.6 Overview of cotton sector financing and role of financial institutions............................... 24
3.7 COVID-19 and cotton production......................................................................................... 25
4.1 Cotton seed oil ........................................................................................................................ 28

4.2 Cotton cake ............................................................................................................................. 32
4.3 Cotton linters ........................................................................................................................... 35
4.4 Cotton stalks ............................................................................................................................ 39
5.1 Legislation ............................................................................................................................... 44

5.2 Government support (production and productivity) ......................................................... 46
5.3 Cotton producers ................................................................................................................... 46
5.4 Developing by-product value chains through public-private partnerships.................... 47
List of tables
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List of figures
List of acronyms and abbreviations

ADD ............... Agricultural Development Division
ADMARC ...... Agricultural Development and Marketing Corporation
AEDO ............ Agriculture Extension Development Officer
AICC ............. African Institute of Corporate Citizenship
CCM.............. Cotton Council of Malawi
CFM............... Contract Farming Model
COFA ............ Cotton Farmers Association of Malawi
CORI.............. Cooking Oil Refining Industry
CPUM ............ Cotton Production Up-scaling Model
DARS ............. Department of Agriculture Research Services
DWS .............. David Whitehead and Sons
ECOAM ........ Edible Cooking Oil Association of Malawi
EIF.................. Enhanced Integrated Framework
EPA ................ Extension Planning Area
ESA ................ Eastern and Southern Africa
FAO ............... Food and Agriculture Organization
FGD ............... Focus Group Discussion
FUM ............... Farmers Union of Malawi
GOT............... Gin Out Turn
ICAC ............. International Cotton Advisory Committee
KII ................... Key Informant Interview
LUANAR ........ Lilongwe University of Agriculture and Natural Resources
MCDS............ Malawi Cotton Development Strategy
MK.................. Malawi Kwacha
MoA ............... Ministry of Agriculture
MoTI .............. Ministry of Trade and Industry
MT.................. Metric Tons
NAIP .............. National Agriculture Investment Plan
NAP................ National Agriculture Policy
v
NCFS ............. National Contract Farming Strategy

NES ................ National Export Strategy
NGO .............. Non-Governmental Organization
PPP................. Public-private partnerships
SADC ............ Southern African Development Community
SWOT............ Strengths Weaknesses Opportunities Threats
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Chapter 1. Introduction
1.1 Background
Malawi is a highly commodity-dependent country where commodities represented 92.3 per
cent of merchandise exports in 2018-2019, increasing from 90.4 per cent ten years earlier
(UNCTAD, 2021). Agriculture accounts for 31 per cent of GDP but employs 76 per cent of the
workforce. Women represent more than half of the agricultural workforce. The agriculture
sector, comprising estate and smallholder farming, accounts for almost 90 per cent of export
revenue. The four leading commodity exports are tobacco, tea, sugar, and cotton. Malawi
exports were down from about US$1 billion a decade ago to US$865 million in 2018-2019,
reflecting the vulnerability of the economy to price fluctuations in primary commodities. As a
landlocked country, Malawi depends on access to ports in neighbouring countries, such as
the deep-sea port of Nacala in Mozambique, and other logistics corridors including railways,
to reach international markets.
Historically, the very first cash crop of Malawi was coffee, followed by tea. However, since
the 1920s, tobacco has been the country’s main export crop. The ongoing anti-tobacco
global campaign impressed the need for Malawi to identify alternative export crops such as
cotton, which has been grown since the early 1960s. Over 200,000 smallholder farmers use
their income from cotton to buy food and pay for other necessities. This is particularly crucial
in cotton growing areas where food crops such as maize are constrained due to adverse
weather conditions. Cotton has a relatively long value chain comprising, in addition to its
production, the processing industry in terms of ginning, oil crushing, spinning and weaving
companies, as well as textile and garment retailers. In total, 15,000 people are employed in
the processing sector.
Until the 1980s, seed cotton was bought and processed by the government-owned
Agricultural Development and Marketing Corporation. After market liberalization, private
sector ginners entered the cotton business (WTO, 2019).
The area that is dedicated for cotton production in Malawi is fully rainfed. More than half of
this area is in the Lower Shire Valley. Although its planted area is much smaller than that used
for main crops such as maize, groundnuts, sweet potatoes and dry beans, cotton is one of
the priority oil seed crops. The National Agriculture Investment Plan (NAIP) describes cotton
and other oil seeds as having potential both in the domestic and export market. Indeed,
cotton seed oil consumption contributes to food and nutritional diversity.
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Despite the importance of cotton as a cash crop, its yields are generally low, hovering
between 200 and 300 kg/Ha of lint in the past three decades (ICAC, 2021). This low yield is
due to a number of constraints including the following: poor or inadequate insect and mite
pest management, high investment requirements aggravated by high levies on inputs such
as pesticides, spraying equipment, protective clothing and fertilizer; inappropriate crop
husbandry practices; environmental factors such as moisture and heat stress in drought
prone areas; low soil fertility; competition with high value crops with respect to pricing and
marketing; and lack of high yielding varieties with improved fibre quality characteristics.
The Malawi Government, through the Ministry of Agriculture, launched a special programme
for the revitalisation of the cotton value chain known as the Cotton Production Up-scaling
Model (CPUM) between 2011-14. The government invested 1.6 billion Kwacha (equivalent to
US$10 million using an exchange rate of 160MK per US$ in 2011) to support smallholder
farmers within the framework of CPUM, leading to an average production of 148,000 metric
tons of seed cotton for three seasons as of 2011/12. CPUM aimed to set up a cotton
development fund sustained through levies from ginners and farmers. However, this failed
because ginners under-declare the amount of cotton that they buy on the market to pay less
levy. This happens because most cotton is traded through informal channels. So overall,
there is limited transparency in the cotton market.
Following CPUM, the Contract Farming Model (CFM) was introduced between 2013 and 2015
by ginners who made an investment of K2 billion Malawi Kwacha (equivalent to US$5 million
using an average exchange rate of 400 MK per US$ for the given period). It was expected
that the private sector would sustain cotton production through CFM, which increased
production of seed cotton by 7,000 metric tons on average during the implementation period.
However, it was discontinued due to the high default rate of farmers, which resulted in losses
amounting to 1.3 billion Malawi Kwacha (US$3.25 million using 400MK per US$). Since the
peak recorded in the 2011/12 season, production volumes have been on the decline.
More recently, the National Agriculture Investment Plan (NAIP) for 2017/18-2022/23 1 has
targeted strengthening the regulatory and institutional framework for cotton to create an
enabling agribusiness environment and public-private dialogue. The priorities identified in the
cotton value chain were lint and cotton seed oil crushing, which left out other cotton by-
products. Since the ginning companies export more than 95 per cent of cotton lint and cotton
seed (mainly to South Africa), they have a stable source of income. However, the income
1
National Agricultural Investment Plan (NAIP). Prioritised and Coordinated Agricultural Transformation Plan for
Malawi: FY 2017/18-2022/23. January 2018. https://www.scotland-
malawipartnership.org/assets/resources/National_Agicultural_Investment_Plan_2018_Final_Signed.pdf
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does not trickle down to the smallholder farmers who produce seed cotton, creating
disincentives for increasing production.
1.2 Objectives and methodology

The objective of the report is to provide a feasibility assessment on the development of cotton
by-products in Malawi. It highlights opportunities with regard to the use of cotton by-
products in order to stimulate discussion among key stakeholders towards improving the
livelihood of smallholder farmers. The feasibility assessment will provide the basis for
requesting technical and financial support to develop cotton by-products as prioritized
through a national validation process. It includes the analysis and mapping of stakeholders
involved in cotton by-product value chains with growth potential, as well as the analysis of
the policy environment, looking at the actual and potential bottlenecks, and the opportunities
presented by cotton by-products with respect to their contribution to poverty reduction,
inclusiveness, and gender equality.
The study relied on a hybrid approach that combined literature review, a Strengths,
Weaknesses, Opportunities, and Threats (SWOT) analysis, stakeholder analysis, and
participatory methods based on field data collection and data analysis. Field data was based
on focus group discussions (FGDs), key informant interviews (KIIs), and a survey
questionnaire which targeted smallholder farmers who produce cotton. All methods were
gender-sensitive, taking into account the differences between men and women in the cotton
value chain ecosystem.
Literature review
The literature review involved comprehensive enumeration, description, and summarisation
of related research studies on cotton and cotton by-product development in Malawi. The
data mining technique was employed to identify and extract relevant information about cotton
by-products from large sets of data. Several databases were consulted as cited in this report,
including the Food and Agriculture Organization Statistical Database (FAOSTAT). The review
used technical reports prepared by stakeholders in the cotton sector and communications
issued at international meetings, as well as several papers on cotton by-products that were
submitted by the Enhanced Integrated Framework project officer.
SWOT analysis
A SWOT analysis was used to assess the cotton sector in Malawi. It helped to understand in
detail and build on what went well, address what was lacking, minimize risks, and take the
greatest possible advantage of the potential for success of cotton by-product development.
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Stakeholder analysis
The study made use of stakeholder analysis and mapping, whereby it identified, categorized
and visually represented key stakeholders involved in the development of specific by-
products, as provided in Chapter 4. Each stakeholder analysis considers the interests, needs,
impacts, risks and strategies that are valid for key players involved in the development of a
specific by-product.
Participatory methods
Focus Group Discussions (FGD) involved gathering male, female, and youth smallholder
farmers together in groups of 8 to 12 people to discuss cotton production, seed cotton
marketing and cotton by-products. Research questions were asked about participants’
perceptions, attitudes, beliefs, opinions, or ideas. The moderator (interviewer) was guided by
a checklist for discussions on cotton production, seed cotton marketing, and cotton by-
products.
The FGD process included sampling the respondents; recruiting a field team; developing a
checklist; training and pre-testing; conducting FGDs; and transcribing, analysing and
interpreting responses. A total of five FGDs were conducted covering Karonga, Blantyre,
Chikwawa (Dolo and Mikalango Extension Planning Areas) and Neno. In total, there were sixty
participants in FGDs (see Annex 1 for the participants list).
Key Informant Interviews (KIIs), also called the in-depth interviews method, were used to
gather qualitative information. Like the FGDs, a checklist was used to guide the key informant
interviews and capture the concerns and proposals of experts and officials relating to policy,
cotton by-products, resources, and the performance of the cotton sector. Visits to
warehouses were conducted to better understand the challenges encountered in cotton trade
due to COVID-19. The data collection process included transcribing and coding; keeping
clear folders and records; and the identification of respondents. In total, there were thirty-
seven participants in KIIs (see Annex 2 for participants list).
A survey questionnaire was used to obtain basic information about the perceptions of
smallholder cotton farmers. Different variables were measured including production, variety,
market (seed cotton buyers and prices) and cotton by-products. A total of 142 farmer
interviews were conducted using the survey questionnaire in selected districts of the northern
region (Karonga), central region (Salima) and southern region (Chikwawa, Neno, Balaka).
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The remainder of this report is structured as follows: Chapter 2 undertakes an analysis of key
players, institutions and the policy and legal environment for cotton production in Malawi.
Chapter 3 provides an overview of cotton production, covering production trends, cotton
extension support, challenges faced by smallholder producers, cotton markets, and cross-
cutting issues. Chapter 4 presents a SWOT and stakeholder analysis with a view to identifying
the potential for expansion of cotton by-products. Finally, Chapter 5 concludes with
recommendations as suggested by actors in FGDs and KIIs in relation to legislation, policy,
regulatory authority, private sector, cotton producers and cotton by-product value chains.
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Chapter 2. Key players and policy
environment
An enabling institutional policy environment is crucial for the development of cotton by-
products. The below sections provide an analysis of the key institutions and players in the
cotton sector of Malawi, as well as the current policy environment.
2.1 Key institutions involved in cotton production

For the purposes of providing government extension services, Malawi is divided into agro-
ecological zones known as Agricultural Development Divisions (ADDs), which are further
segmented into District Agriculture Development Offices (DADO) and Extension Planning
Areas (EPAs). Non-governmental entities such as NGOs provide extension services following
the same structure (Kundhlande et al., 2014).
The Ministry of Agriculture provides specialised cotton extension services through its Cotton
Officers located in ADDs and DADOs, although extension services are needed more at the
smallholder farmer level. There are Agriculture Extension Development Officers (AEDOs)
closer to smallholder farmers, but they are not cotton subject-matter specialists that can
competently advise on cotton production. There is a need to train and select AEDOs to work
closely with District Cotton Officers on cotton production through cotton agronomy.
The Ministry of Agriculture leads cotton research through the Department of Agricultural
Research Services (DARS) at Makoka Research Station in Zomba district. Quton, a company
that supplies seeds in Malawi, is collaborating with DARS at Makoka and Chitala Research
Stations to multiply the local cotton varieties. Chitala undertakes trials to observe the
performance of cotton treated with Gaucho and Sivanto insecticide technology for integrated
pest management. The trials screen cotton performance against early season cotton pest.
Field information indicated that Gaucho technology has reduced the frequency required for
using foliar sprays and the burden of resorting to intensive sprays by farmers at the
development stage of cotton. 2
The Department of Agricultural Research Services also works in collaboration with the
Lilongwe University of Agriculture and Natural Resources (LUANAR), which undertakes Bt
cotton 3 (genetically modified) research. The broad cotton breeding programme at Makoka
Research Station led by DARS aims to develop high yielding locally adapted varieties with
2
Individual interview with Trial Assistant Godwin Cherwa at Chitala.
3
Bt is the abbreviation for the bacterium Bacillus thuringiensis.
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improved ginning out-turn (GOT) and acceptable lint characteristics, and pest tolerance.
Current breeding activities are as follows:
• Selection from various materials like crosses between adapted Malawian varieties;
• Screening selected plants for yield and yield components like GOT, lint index, boll
size, seed size; trials of progeny grown at three sites (Makoka, Ngabu and Chitala);
• Screening for jassid resistance 4 under unsprayed conditions;
• Conducting district line yield trials before releasing the variety for commercial seed
production.
Makoka Research Station has insufficient cotton scientists, inadequate infrastructure, and
insufficient funding to support research and development on cotton breeding. The current
breeding programme needs funding for on-farm trials and variety maintenance, seed
processing and development of cotton by-products. Research on cotton by-products
requires cotton seed oil millers and refiners, as well as equipment to add value to cotton stalk
and linters.
The Cotton Council of Malawi (CCM) was established by the Cotton Act of 2013 with the
mandate to regulate, develop and improve the cotton industry in Malawi. The CCM board of
directors is composed of a Chairman who is appointed by the President, two members of
ADMARC, two members of ginners, two members representing growers and two members
representing the government. CCM has an oversight role on cotton production and
marketing, seed cotton auction floors, ginning, monitoring sales, definition of seed cotton
grades, and awarding licenses to buyers and exporters. The vision of CCM is to become a
progressive regulator, effectively contributing to the development of a sustainable cotton
industry. The mission of the Council is:
• To contribute to the growth of the cotton industry through the development of

standards and regulations;
• To ensure adherence to fair trade practices by value chain players;
• To promote sustainable innovations and information sharing through a competent

and committed workforce.
The Cotton Council of Malawi is still in its infancy. Its workforce is insufficient to effectively
regulate the cotton sector. The Council has no institutions and structures to implement the
Cotton Act of 2013. CCM has failed to sustain the ginners because of low production and
4
Jassid is a pest that affects the cotton crop. Screening involves identifying varieties that naturally show
resistance to the pest, for example due to hairiness of their leaves.
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productivity of the cotton sector. When asked to supply lint to the international market, CCM
fails to quantify the volume available in Malawi, because it does not have access to ginner
databases, while ginners separately establish their own aggregation centres in proximity to
the farmers.
However, despite limited staff, CCM is involved in input supply and cotton extension service
delivery, which conflicts with its mandate as a regulatory authority. While the Malawi Cotton
Development Strategy (MCDS) provides for the participation of private extension services
delivery by farmers’ organisations, ginners, input suppliers and NGOs to complement public
extension services, the practice on the ground revealed that there was poor coordination
among stakeholders. For example, in some ADDs where CCM conflicted with the established
Agriculture Extension System, Cotton Officers have been deployed to other duties where
staff were lacking. This has resulted in cotton becoming a part-time crop. In other cotton
growing areas, the Cotton Officers at ADDs and District Cotton Officers had reduced the
frequency of contact with smallholder farmers to a bare minimum.
The Key Informant Interviews revealed that CCM was implementing instead of regulating,
which is a situation that is not favourable for boosting cotton production. Furthermore, the
regulating authority has not set rules to operationalise the Cotton Act, which is already
outdated in the current cotton ecosystem.
In the current setup, ginners collect cotton levies on behalf of CCM. This implies that the
regulated become the regulator by default, hence it is difficult to enforce anything that would
aggrieve the relationship. The CCM board has some members with vested interests in the
cotton sector that may likely manipulate the regulator. Seed suppliers, chemical suppliers,
and buyers of seed cotton are all part of the board. The ginner, who is the buyer of seed
cotton, also takes part in setting the Farm Gate price before the opening of the cotton market.
This arrangement militates against fair trade. The powerful members of the CCM board with
market intelligence are likely to take advantage of the market to determine (lower/higher) price
offers.
2.2 Smallholder farmers

Cotton is mainly produced by smallholder farmers in Malawi, where labour productivity in the
agricultural sector remains very low, with value added per worker of US$170 per year. This
figure is less than half the average productivity in low-income countries, which currently
stands at more than US$350 (Phiri, 2018). That in turn is significantly lower than SADC and
SADC middle income country averages (US$1088 and US$1880, respectively). Much of the
agricultural labour force in Malawi remains idle during the part of the season between
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marketing seed cotton and starting the next cotton planting season. There is a need to
enhance labour productivity to meaningfully improve the livelihoods of rural people through
input price policies, value addition to agricultural products and farm level output
diversification. Off-farm value chain development, as through cotton by-products, has the
potential to raise labour productivity, particularly in the period after the marketing of seed
cotton, because it would provide employment opportunities in manufacturing, transportation,
processing, and marketing.
Men constitute 72 per cent of the cotton farmers registered in the Cotton Farmers Association
of Malawi (COFA) database. 26 per cent of these are youth, many of whom are engaged in
supporting their parents in cotton production. Meanwhile, the findings of the feasibility study
survey point to a more diverse picture on gender and employment in the cotton sector of
Malawi. According to data obtained from survey respondents, cotton production was
undertaken by men alone in 9 per cent of households; by women alone in 19 per cent; by a
combination of men, women and youth in 33 per cent, and by men and other family members
in 1 per cent.
Cotton is perceived as a domain for men because they lead the heavy task of field spraying.
Women and youths play significant roles in cotton production as well, especially in labour-
intensive tasks like weeding and cotton picking. Men largely assume control of output, make
production and marketing decisions, as well as decisions on the use of revenue from cotton
sales. This is mainly due to the traditional customs and beliefs, coupled with gender myths
and stereotypes that are deeply rooted in Malawi. As a result, the effort of women put in
cotton production remains limited. In addition, there is also low involvement of women and
youth in the management of farmer organisations where very few hold decision-making
positions that could be of influence.
Farmers organisations are at a very early stage in Malawi. From the interviews, a huge cotton
business intelligence gap was identified between farmer associations and ginners, especially
those who exported to international lint and cotton seed markets. Farmer organisations
including COFA and cotton club leadership had limited data, information, and knowledge
about the cotton business (cotton value chain) which weakened their hand in negotiating and
mobilising resources. Access to finance by smallholder farmers is weak at present because
the clubs only help farmers to access inputs (seed and chemicals) and not capital investment
for value addition within the cotton value chain.
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Cotton Farmers Association of Malawi (COFA)

COFA is a representative body of cotton farmers at national level that was formed in 2009. It
functions as an umbrella organization of loosely organized cotton clubs. Although 65.5 per
cent of smallholder farmers across the country are members of an association or cooperative
at Extension Planning Area or district level, only 31.1 per cent of farmers are aware of COFA
(Government of Malawi, 2019). It has no secretariat, and no funds to undertake initiatives
towards increasing its membership. It has a Board of Directors that is elected every three
years through voting by representatives of the 15 cotton growing districts of Malawi. COFA’s
main areas of work are improving access to production services, lobbying for marketing
efficiencies, and representing members in policy fora. 5 In its current form as an association,
COFA is weak both financially and in terms of governance at national and district level.
Perception of smallholder farmers on cotton by-products

Most interviewed smallholder farmers (92 per cent) were aware of cotton by-products, but no
respondent had ever earned extra cash from by-products. They were most familiar with
cotton seed cake. At the household level, only firewood, cotton pillows and chair cushions
were considered as important by-products of seed cotton. Firewood was used by 98 per cent
of households for cooking. Cotton stalks were used as firewood or feed for cattle, which was
against the closed season rule that promotes the ‘uproot and burn on-site’ practice. Other
high value by-products mentioned during group discussions were feminine hygiene pads,
baby hygiene products, pharmaceuticals, medical bandages, and soap. Medical bandages
are not readily available in rural health facilities and patients are often asked to buy bandages
from nearby pharmacies. Cottonseed oil could be used by small and medium-sized
enterprises (SMEs) to produce soap. The Malawi Bureau of Standards undertook trainings
for SMEs on making soap and could be part of a new initiative to produce cotton-based soap.
Smallholder farmers face the following challenges to their participation in the cotton by-
product value chain:
• The policy environment is unfavourable for cotton by-products development, as it

prohibits the use of cotton stalks off-farm (100 per cent of respondents);
• Limited knowledge of the by-products market to stimulate production (100 per

cent);
• Lack of the capacity and skills to produce by-products (90 per cent);
• Lack of necessary equipment to produce by-products (10 per cent).
5
http://mail.aiccafrica.org/index.php/news/110-cofa-elects-new-board-of-directors
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The majority of smallholder farmers said that what they needed most was competitive seed
cotton prices on the market to increase cotton production. Currently, ginners take ownership
of the seed free of charge after the ginning process because the seed is not factored into the
purchase price of seed cotton. Therefore, its value is concealed. Smallholder farmers
recommended the introduction of a pricing mechanism for cotton seed and cotton stalks,
clearly identifying them as by-products that can be sold. However, under the present
scenario, smallholder farmers fear that ginners would not easily agree to cotton seed pricing.
Market fairness was another concern of smallholder farmers, who see themselves losing out
because of their weak organisation, and low financial and technical capacity. Ginners are
more powerful in the cotton ecosystem as they provide input loans, regulate contracts,
participate in seed cotton price setting, buy seed cotton, own linters and seed, and export
cotton products. Producers require a stronger organisational setup, for example through
Farmer Cooperatives, instead of just an association.
Cotton farmers’ geographic location is a weakness and threat because they are separated
from the main electricity grid, are too far from off-takers, and require business infrastructure
and viable markets. Farmers already have difficulties to access production inputs, so
investing in cotton by-products would become another challenge to resolve. Attracting
investors, for example, in particle boards and briquette manufacturing, is perceived as a real
challenge because they require large volumes of cotton seed and cotton stalks. Farmers hold
the perception that investors may not be willing to get into stalk value addition at present
cotton production trends. Hence, they suggest investing more in the cotton breeding
programme of Malawi to improve productivity and cotton seed oil yield per kilogram to
increase their income.
2.3 Ginners, oil seed crushers and textile manufacturers

There are three main ginners in Malawi: ADMARC, Afrisian, and Malawi Cotton Company
Limited.
The Agricultural Development and Marketing Corporation (ADMARC) was formed in 1971 by
Act Chapter 67.03 of Parliament as a Government-owned parastatal. The mandates of
ADMARC include the promotion of the Malawian economy by increasing the volume and
quality of its agricultural exports, and the development of new markets for the consumption
of Malawian agricultural products. ADMARC is also mandated to procure and sell farm inputs
such as fertilizers, seeds, and crop pesticides to support smallholder farmers. ADMARC has
weak international cotton product market business intelligence, as demonstrated in some
cases by not knowing where their lint was sold. ADMARC sold cotton products to brokers in
11
South Africa, who in turn sold to lucrative global markets. The weakness of ADMARC was
replicated at smallholder farmer level whereby farmers’ seed cotton could not be sold to
ADMARC, for example in Chikwawa and Karonga. ADMARC is politically vulnerable to
operate as a business, leading to an unstable seed cotton market.
Afrisian Limited of Malawi is a subsidiary of Afrisian Ginning Ltd (AGL), which started business
as a cotton ginner in 1997. Since then, AGL has expanded its trading activities both within
the cotton sector and beyond. Today, AGL operations and products include oil seed
crushing, rice milling, cleaning and export of peanuts, sesame seeds, maize and pulses such
as green mung, yellow gram and pigeon peas. Afrisian Limited is the only ginner with head
offices in Blantyre. In contrast to ADMARC, it has direct access to export markets and is in
contact with the buyers of its lint and cotton seed. Afrisian Limited buys seed cotton from
smallholder farmers, though at times late in the buying season.
Malawi Cotton Company Limited is a subsidiary of China-Africa Cotton Development Limited

and is located in Salima. Apart from Malawi, it carries out business in Mozambique, Zambia,
and Zimbabwe. In addition to seed cotton buying, the Company is involved in cotton seed
breeding, distribution, planting, processing, marketing, oil processing and sales, cotton by-
products sales, as well as spinning and sales of low-grade cotton. Malawi Cotton Company
Limited shut down in 2022 because of the lack of raw materials to operate its ginnery.
The Edible Cooking Oil Association of Malawi (ECOAM) is the apex organisation of the oil
seed crushing and seed subsectors. There are five key players in the edible oil industry:
Capital Oil Refining Industries (CORI) Limited; Sunseed Limited; Meru; Agri Value; and Moti
Oil Mills Limited.
Three companies are involved in the manufacturing of textiles (fabrics), namely; Mapeto-
David Whitehead and Sons Malawi Limited (MDWS), Knitwear Industries Limited, and Malawi
Cotton Company Limited. The Malawi Council for the Handicapped (MACOHA) has a weaving
factory at Bangwe in Blantyre. All these companies have scaled down their operations due
to inadequate raw materials and other inputs, as well as unfavourable competition from
smuggled products.
Perception of processors on cotton by-products

Knowledge of cotton by-products was common among processors (ginners, oil seed
crushers and textile manufacturers) that were consulted during the study. Cotton by-product
initiatives are part of the business growth strategies of processors. Ginners are powerful
players in the cotton sector because they buy seed cotton from smallholder farmers. They
trade in cotton seed, crush seed into edible oils and produce cotton cake for livestock feed.
12
Ginners are already engaged in cotton seed marketing in the domestic and export markets.
Afrisian Limited exported cotton seed to South Africa, specifically to Johannesburg and
Stellenbosch. However, cotton seed prices varied on the international market depending on
demand and supply dynamics. Afrisian Limited described the domestic market for cotton
seed as small and not stable. There was no large domestic buyer of cotton seed in 2020,
2021 and 2022.
Ginners like ADMARC indicated that among bankable projects, they planned investments in
crushing cotton seed into oil, producing animal cake, and manufacturing of pharmaceutical
products such as cotton wool, bandages, feminine hygiene products, and baby products.
Mapeto (DWS) Limited Company was exploring investing in linters by-products, specifically
pharmaceuticals manufacturing, feminine hygiene and baby nappies. Mapeto Limited already
manufactures ropes from cotton linters that are sold on the domestic market. The Edible
Cooking Oil Association of Malawi has state-of-the-art technology and infrastructure with
huge capacity for manufacturing edible oil but cited low quantities of cotton seed and low oil
yield per kilogram of cotton seed as key issues.
The risk faced by the edible oil sector is the importation of crude vegetable oil which leaves
the local cotton seed unused. Cooking oil manufacturers import crude vegetable oil as an
intermediate product, thereby avoiding taxes, and refine them for the local market, blaming
the tax regime that renders the production of local cooking oil expensive. Furthermore, local
oil manufacturers choose to import sunflower seed due to the low oil yields of local cotton
seed. As a result, ginners find it to be their best option to export their available cotton seed
to South Africa, where seed is bought in United States Dollars, and fetches better prices
compared to the domestic market, where Malawi Kwacha is devalued against the dollar every
year before agricultural commodities markets open.
2.4 Policy environment

The Malawi Growth and Development Strategy III, National Agriculture Policy, National
Agriculture Investment Plan (NAIP), and National Export Strategy (NES) have identified cotton
as a priority cash crop for employment generation and poverty reduction. Several policies of
Malawi have identified cotton as a key economic sub-sector, with the potential to benefit 1.6
million people in the drier lakeshore areas and Shire Valley. The NAIP ranks cotton as one of
the top five effective value chains to stimulate economic growth.
The Government of Malawi, through the Cotton Act of 2013, regulates cotton production,
processing, marketing, and matters incidental thereto. The Cotton Act promotes crop
hygiene in the field through the observation of a closed season. It requires that farmers uproot
13
cotton stalks by 30 July and burn them by 15 August in the Central and Southern Regions.
In the Northern region, the Cotton Act compels smallholder farmers to uproot stalks by 31
August and burn them by 15 September. Any person who fails to comply with this regulation
commits an offence. Consequently, the regulation limits the scope of use of cotton stalks as
a by-product in Malawi, and it can only be reviewed and amended through a Bill of
Parliament.
Currently, there are no dedicated policies on cotton by-products in Malawi. However, there
is limited mention of by-products in some policies, in particular regarding edible oil and cotton
seed cake. The potential of oil seeds has already been identified under the NES and has been
confirmed by the Economic Computable General Equilibrium Model, which demonstrated
that the economy of Malawi would undergo positive change if cotton seed oil were to be
developed and exported (Government of Malawi, 2012).
Cotton seed oil was recognised as a by-product with export potential by the following
policies: Malawi Cotton Development Strategy (MCDS) 2019-2024, National Agriculture
Policy (2016), National Export Strategy (2012), National Agriculture Investment Plan (2018),
and National Contract Farming Strategy (2016). These policies are focused on addressing the
challenges relating to value addition, export trade and regulatory frameworks. For example,
the NAIP and MCDS have developed strategies to strengthen the policy and regulatory
environment, and to enhance trade competitiveness and market development. These policies
are not adequately propelling real transformation at smallholder farmer (micro) level, as
farmers demand fair prices that can increase their income. The current state of policies
persistently holds smallholder farmers at the production segment of the cotton value chain
to supply the needed raw materials to the industries through established ginners’ markets of
seed cotton. The National Contract Farming Strategy (2016) links farmers, ginners, suppliers
of farm inputs and third-party entities participating in production arrangements. The ginners
provide inputs (seed and chemicals) to smallholder farmers that are organised in cotton clubs.
Contract farming has failed to deliver results due to weak market arrangements to recover
input loans given to smallholder cotton farmers.
There are policies that focus on increasing cotton production in Malawi. The MCDS, for
example, aims to increase production from the current level of approximately 20,000 MT to
200,000 MT, and yields from 750 kg/ha to 2,000 kg/ha by 2024 through investment in market
development, research, technology generation, and dissemination of information on good
farming techniques. The 200,000 MT target is higher than the original 100,000 MT target set
by CCM. The MCDS takes as a reference the highest production level ever attained, in
2011/12 season (176,534 MT), while the CCM target is based on the average cotton
14
production for the decade between 2011 to 2020 of 73,000 MT. Given that production has
been on the decline for a decade and little has been done to improve the situation, the MCDS
target remains unrealistic. Likewise, the MCDS target yield of 2000 kg/ha is also ambitious
considering the current level of investment in research and development. Since the inception
of MCDS in 2019/20 season, there has been limited investment in cotton research, and
insufficient extension services delivery in order to raise production.
Nevertheless, the MCDS plans to strengthen small scale value addition to seed cotton, using
existing mini-ginneries that are supported by the One Village One Product (OVOP)
Programme, and plans to achieve its target production level through three strategies:
• Recruiting more smallholder farmers;
• Investing in irrigation infrastructure;
• Recruiting larger agricultural organisations such as Press Agriculture Limited.
The Malawi Bureau of Standards (MBS) is a statutory organization established in 1972 by an

Act of Parliament (Cap 51:02) of the Laws of Malawi (Amended as Act No 14 of 2012)
mandated to enforce standardization of and quality assurance of products and commodities.
Therefore, MBS is an important player in the development of cotton by-products for medical
uses, human food, and animal consumption. Although SMEs account for a large share of
employment in Malawi, they have limited skills and knowledge to participate in the
manufacturing sector and trade in the formal markets because of the skill and knowledge
gaps of MBS.
It remains to be seen whether these strategies will succeed in an environment where large
ginners and cotton seed crushers have exited the business because of low cotton production.
Furthermore, the MCDS has not adequately outlined strategies on seed cotton pricing
arrangements, which is one of the major challenges faced by smallholder farmers. During
focus group discussions and KIIs, it became clear that without increasing seed cotton
volumes, the development of by-products would be a far-fetched dream for Malawi.
15
Chapter 3. Overview of cotton production in
Malawi
3.1 Seed cotton production trends
Cotton is traditionally produced in five of the eight Agricultural Development Divisions (ADDs)
in Malawi, where it provides a valuable source of revenue: drought-prone areas of Karonga,
Salima, Blantyre, Machinga, and Chikwawa and Nsanje districts of Shire Valley. According to
the Cotton Council of Malawi, the country has the potential to produce more than a hundred
thousand metric tonnes of seed cotton annually if farmers were mobilised, input supply
systems were effective, and seed cotton prices were attractive to smallholder producers.
However, since 2015, annual seed cotton production has mostly been around only 20,000
MT, and planted area has been gradually receding down to a low of about 17,000 hectares
in 2020-2021 season. Figure 1 shows cotton production trends as reported by five ADDs
between 2007 and 2021.
Figure 1: Malawi cotton production trends by Agricultural Development

Division (ADD) (2008-2021)
Blantyre Karonga Salima Shire Valley Machinga Total

200000
180000
160000
Production (metric tonnes)
140000
120000
100000
80000
60000
40000
20000
All ADDs experienced relatively high levels of cotton production between 2011-2014 due to
the Cotton Production Up-scaling Model (CPUM). Production at national level peaked in
2011/12 growing season mainly due to CPUM, whereby farmers were mobilised to produce
cotton. Following the end of CPUM, the cotton industry has experienced a downward trend.
16
The sudden drop in cotton production and low seed cotton production between 2013-2021
across ADDs was due to three main factors:
• Low seed cotton prices in years of high production and subsequent years which
forced farmers to exit cotton farming;
• Timing of supply of cotton seed for planting was not well synchronised with
farmer’s availability of cash (late supply of seed on the market);
• Use of recycled seed by some farmers which affected cotton productivity (and
consequently production).
Other issues were responsible for the drop in production as well, ranging from poor supply
of inputs, low access to extension services, low adoption of good cotton production
practices, and negative climate variability impacts.
Very low production levels were recorded as of the 2015/2016 season especially due to
drought and mealybug experienced in Shire Valley ADD, where planted area was lowest in
2016/2017 (12,531 ha) because of poor seed cotton prices recorded in the previous season.
Other factors also played a role in low production, as in the case of Karonga ADD, which is
close to the border with the United Republic of Tanzania. Cotton production never really
recovered in Karonga after the end of CPUM. During a field visit, smallholder farmers in
Karonga mentioned that they chose to grow sesame and groundnuts over cotton because
they fetch better prices in the Tanzanian market. Sesame and groundnuts are exported to
Tanzanian vendors who then sell the produce to cooking oil crushers in the United Republic
of Tanzania.
More recently, the sudden increase in cotton production that can be observed in Figure 1 in
Shire Valley for 2019-20 was due to two factors: 1) farmers planted hybrid seed which
increased cotton productivity per hectare, and 2) farmers benefited from soft loans in the
form of seed through CCM, whereby they paid 50 per cent of the cost of seed, while the
Government injected funds to support CCM for the remaining 50 per cent. The sudden
decrease thereafter was due to the discontinuation of the soft loans and poor seed cotton
prices.
3.2 Cotton yields

Cotton is treated as a special crop in the Cotton Act of 1953. The Department of Crop
Development is allocated funds to facilitate cotton agronomic extension services, but
presently this funding is not channelled to the department. Limited investment in the cotton
sector has affected research and development and the delivery of extension services.
17
Research in the cotton sector is underdeveloped, as can be observed from the cotton variety
release history of Malawi where only one variety has been released in the last two decades
(the Makoka 2000 seed). The local cotton seed planted by farmers had poor germination
which resulted in wastage of seed, low yields, and weak plant stands susceptible to diseases
and pests. These conventional cotton varieties require smallholder farmers to spray against
bollworm infestation seven to eight times to control the pest. Resource-poor farmers lament
this situation because sprays are costly and labour-demanding, making the growing of cotton
less profitable, hazardous to human health and environmentally unfriendly.
Seed cotton lint yields in Malawi averaged around 300kg/hectare compared to the global
average of 700kg/hectare, and as high as 2000kg/hectare for some advanced economies
(WTO, 2019). Figure 2 shows the average lint yield in Malawi as of 1961/1962 season.
Figure 2: Malawi average cotton lint yields from 1961 to 2021 (kg/ha)
400
350
300
250
200
150
100
50
0
2021/22 est
1961/62
1963/64
1965/66
1967/68
1969/70
1971/72
1973/74
1975/76
1977/78
1979/80
1981/82
1983/84
1985/86
1987/88
1989/90
1991/92
1993/94
1995/96
1997/98
1999/00
2001/02
2003/04
2005/06
2007/08
2009/10
2011/12
2013/14
2015/16
2017/18
2019/20
Source: ICAC
From the mid-1990s onwards, yields fluctuated between 300 and 350 kg/ha because cotton
benefited from dedicated Cotton Officers who provided extension services on agronomic
practices as well as good access to inputs and their adequate use in the cotton field. It was
in the mid-1990s to early 2000s that Malawi liberalized its market of special crops including
cotton, resulting in private sector investments. In 2004/2005, yields dropped because
ADMARC ginneries were privatized, which affected timely cotton seed and chemicals supply
in the designated outlets that had new owners. The decline in productivity recorded in
2017/18 was due to late seed supply and poor prices. Yields increased again thereafter
because of the hybrid cotton seed offered by CCM on discount.
The average lint yield for the last four seasons remained around 250 kg/ha. Although
genetically modified pest-resistant Bt cotton may boost yields four-fold over conventional
18
varieties, 6 it may not improve yields under 100 per cent rain-fed agriculture. Bt cotton is more
suitable for irrigation-based production, 7 which is currently underdeveloped in Malawi. There
are variations between Agricultural Development Districts (ADD) in terms of cotton yields
because of the different numbers of farmers who grow cotton, varieties grown, and market
competition. For instance, Shire Valley, Machinga ADD, and Blantyre ADD have larger
numbers of cotton farmers than Salima and Karonga ADDs. At present, Shire Valley produces
50 per cent of national seed cotton.
3.3 Extension services

The Malawi Cotton Development Strategy (MCDS) has provided for multi-stakeholder
involvement in cotton extension service provision to ensure that more smallholder farmers
are reached. The MCDS states that the Ministry of Agriculture provided 49.5 per cent of all
extension services, followed by lead farmers (9.7 per cent). Ginners, NGOs and others
accounted for only 2.8 per cent of extension services. Only registered farmers with COFA
(29,118 farmers) can receive extension support with the objective of increasing cotton
production, in addition to production inputs. COFA thereby aims to encourage unregistered
smallholder farmers to join the Association.
The results of the feasibility study survey revealed that respondents received farmer-level
agronomic advice from an AEDO with varying frequencies: yearly (27 per cent), semi-annual
(12 per cent), quarterly (7 per cent), monthly (15 per cent), weekly (9 per cent), received no
advice (31 per cent). Surveyed smallholder cotton farmers were also asked about the
challenges they faced in cotton production. Low seed cotton prices were mentioned as the
longest standing challenge faced by 87 per cent of smallholder farmers surveyed. Cotton
prices were described as unstable from year to year and the price-setting mechanism as not
participative, since farmers participated only cosmetically in the process through COFA.
Forty-six per cent of respondents mentioned other constraints, which included: late payment
by ginners, prohibitive COFA registration fee, aging labour, transportation of seed cotton to
market, and poor extension services. Other pressing challenges were lack of seed cotton
market (mainly in Karonga); scarcity of cotton seed during planting time; disease and pest
prevalence for some cotton varieties; labour constraints to support spraying activities; land
for cotton production; and regulations governing seed cotton markets (Table 1).
6
Alliance for Science. https://allianceforscience.cornell.edu/blog/2019/07/kenya-field-trial-shows-bt-cotton-
boosts-yields-four-fold/. Accessed: 22/08/2021
7
Kai Hughes. Recent Developments in the Cotton Market & Advanced Cotton Technologies for Africa.
https://www.wto.org/english/tratop_e/agric_e/03_icac_global_cotton_market_and_new_technologies.pdf
19
Table 1: Challenges faced in cotton production reported by survey

respondents
Challenge Proportion (per cent)
Low market prices 87
Other constraints 46
Lack of markets 45
Lack of planting materials 41
High pest and disease infestation 28
Labour is demanding 5
Lack of land 2
Harsh government regulations 1
Source: Survey of cotton farmers.
3.4 Analysis of seed cotton market

The study examined cotton markets at two levels: 1) smallholder farmers and 2) ginners
(export market). The smallholder farmers market was zoned until August 2021 according to
Extension Planning Area (EPA) boundaries. This gave the ginners control of the following:
• Specifying the quantity of seed cotton for production;
• Registering farmers through clubs 8 willing to grow cotton;
• Signing production contracts with farmers;
• Supporting registered farmers with production inputs and extension services; and
• Buying seed cotton from allocated zones only.
The zoning system was established to structure the cotton market to enable ginners to
recover loans and reduce loan default rates. Smallholder farmers felt that zoning the seed
cotton market was deliberately arranged to protect the ginners’ business interests and not
theirs. For example, if a ginner had no financial capacity to buy all the seed cotton from
smallholder farmers, those farmers stood to lose, as they could not sell in other zones. Also,
if the ginner did not have enough money to invest in a cotton production campaign, input
supply and extension service delivery, farmers stood to lose in that zone. However, on 9
August 2021, COFA and ginners in Central and Southern Malawi resolved to abolish the zone
system of selling seed cotton in the 2021/22 growing season, to create room for competition
8
These clubs were intended to be channels through which credit facilities and agricultural advice would be
made available to larger numbers of farmers than hitherto. The Government of Malawi, through its Ministry of
Agriculture, introduced farmer clubs in 1978 into the smallholder agricultural system (Kishindo, 2008).
20
among ginners. 9 The contract system of seed cotton marketing was adopted for the 2021/22
growing season.
The cotton marketing season in Malawi runs from May to August. In the case of Salima
district, farmers indicated that they had to travel long distances to sell cotton in another zone
because ADMARC, which was the ginner assigned to their zone, had run out of funds to
purchase their stocks. Further, in 2020, the market period was affected by COVID-19. The
global cotton market was disrupted, which affected the local market as some ginners could
not export lint. For example, at Ngara ADMARC ginnery in Karonga district, a large quantity
of ginned and unginned cotton remained in the warehouse (Figure 3).
Figure 3: Ngara ADMARC Ginnery in Karonga
Source: Field visit to a cotton warehouse in Ngara ADMARC ginnery in Karonga district (photo by Grecium Kachali)
The main export markets for cotton from Malawi are the United Arab Emirates, South Africa,
Hong Kong (China), Mozambique, Bangladesh, India and Switzerland. 10 The African Growth
Opportunity Act (AGOA) provides duty-free access to the United States market for certain
products from Malawi including cotton products such as textile. AGOA stimulated trade in
the late 1990s and early 2000s, during which cotton and lint production, and the resulting
textile manufacturing destined for export was relatively high. 11 This effect dissipated once
cotton production plummeted. It was also confirmed through gravity models that the size of
9
https://times.mw/zone-system-in-cotton-abolished/
10
https://www.selinawamucii.com/insights/market/malawi/cotton/
11
Based on the findings in UNCTAD (2003), and Condon and Stern (2010).
21
trade partners, costs associated with distance to trading partners and exchange rates
significantly affected the margins of Malawi’s cotton exports.
In Malawi, the demand for seed cotton by far exceeds the available supply in the market.
Malawi has a total ginning capacity of 450,000 MT. ADMARC alone has three ginneries 12 with
a total of 150,000 MT ginning capacity. However, in 2021, three ginners were active with total
ginning capacity of not more than 210,000 MT (Table 2). At the time of the feasibility study,
ginners had bought only 9,408 MT of seed cotton out of the estimated 20,000 MT available
in 2021 (Table 2). Even if all the available seed cotton were sold, it would leave more than 90
per cent idle ginning capacity. The survey identified that ADMARC, Afrisian Limited and
Malawi Cotton Company were the main ginners that bought seed cotton from farmers.
Malawi Cotton Company shut down in 2022, implying that it would not buy seed cotton
anymore. The ginning capacity by far exceeds seed cotton production and demonstrates the
need for raising production volumes.
Table 2: Active ginner capacity and seed cotton bought as of July 2021
Ginner Ginning Capacity in MT MT bought by July 2021
ADMARC 150,000 2,800
Afrisian Limited Company 30,000 5,576
Malawi Cotton Company Limited 30,000 1,031
Total 210,000 9,408
3.5 Seed cotton minimum price formula

Seed cotton prices are determined by cotton sector stakeholders composed of ginners,
COFA, Ministry of Agriculture, and the African Institute of Corporate Citizenship (AICC) on
behalf of NGOs. Prices are set at a CCM committee where stakeholders are invited. The CCM
board ratifies the price, which is then endorsed by the Minister of Agriculture.
The seed cotton minimum price is based on three main variable costs: 1-inputs, 2-labour,
equipment & other costs, and 3-capital investments. A break-even price is computed, then
multiplied by a 30 per cent profit margin to come up with the farm gate price which includes
a K20 levy for CCM.
For example, the 2021 farm gate price of seed cotton originally presented by COFA was
K399.14 per kg and the corresponding break-even price was K307 per kg. However, before
the start of buying of seed cotton in 2021, the farm gate price was reduced to K360, to reflect
12
Ginning capacity of 50,000 MT each.
22
changes in international market prices. Hence a farmer would make a profit of only K33 per
kg from the approved farm gate price (K360 minus K20 CCM levy, minus break-even price of
K307), down from K92.14 13 per kg if the original proposal had been approved by price-setting
stakeholders. Simply put, the farmer makes no more than K33,000 (around US$40) profit per
tonne of seed cotton. As a result, the farm gate price for seed cotton acts as a disincentive
to cotton production. On 13 April 2022, the Minister of Agriculture announced the minimum
farm gate prices for agricultural produce for 2022, which included the K400 minimum farm
gate price of seed cotton against K446 proposed by COFA. The minimum farm gate prices
were not significantly different from 2021 but remain low compared to the cost of living.
Smallholder farmers do not have direct input in setting the price. One key informant
commented as follows: “In my view, the cotton and cotton by-products market are highly
controlled by the buyers who in turn blame the international market for fixing the seed cotton
prices, thereby putting farmers on the receiving end of poor prices. The cotton and cotton
by-products market are tilted towards the ginners and cotton by-product companies.
Farmers get a raw deal in most cases. Prices are determined by the buyers when farmers
have already invested in cotton production and prices are usually below break-even ranges.”
There is indeed a temporal discrepancy between the process used to set the seed cotton
price and the situation on the ground. For example, the cost of inputs (such as fertilizer,
labour, chemicals) may be US$20 at the start of the growing season in October. The farmer
plants a hectare of crop in November/December and manages the crop in the field. In the
following March/April, farm gate prices of various crops are set before the produce markets
open in May/June. At this time, gross margin is calculated based on input costs at the start
of cropping season, even though during the production cycle, the price of inputs goes up to
US$30 due to inflation. Therefore, the gross margin diminishes, and the farmer may be unable
to reinvest in a hectare of land next October.
Trends for export market prices for Malawi cotton have been decreasing since 2011.
Literature shows that high return markets in 2019 for Malawi cotton per kilogram were
14
Mauritius, Zimbabwe, United States of America, China and Mozambique. Selina Wamucii
illustrates that export market prices of Malawi cotton have been fluctuating recently. A
kilogram of cotton was going at US$1.25 in 2017 and US$1.54 in 2018. In 2019, the export
price went down to US$1.39 per kilogram. In 2021, the approximate price range for Malawi
cotton was between US$1.39 and US$1.54 per kilogram.
13
Profit: K399.14 - K307= K92.14
14
https://www.selinawamucii.com/insights/prices/malawi/cotton/
23
3.6 Overview of cotton sector financing and role of

financial institutions
The development of cotton by-products depends on leveraging existing means of cotton
sector financing. Hence, the study looked into financing and financial institutions, and found
that they are not actively involved in the cotton industry at smallholder farmer level. While
ginners were able to get loans for capital investment from financial institutions due to their
capacity and access to property as collateral, farmers do not have the possibility to obtain
such loans. CCM provides guidelines on how smallholder farmers could access loans in the
form of inputs (seeds and chemicals) through contract farming. Farmers access input loans
from the ginners, which in turn get deducted from seed cotton sales.
The main reason why financial institutions are not very much involved in the cotton sector is
the unstructured cotton market. Ginners and vendors buy directly from smallholder farmers
because cotton does not get to the market through one gate. Ginners act as financial
institutions that provide loans in the form of inputs and recover the loans during the seed
cotton marketing season, which puts them in a position of power over smallholder farmers
especially in terms of price-setting. When vendors resell their seed cotton to ginners, it
becomes difficult for ginners to recover loans granted to smallholder farmers who had
originally sold their seed cotton to vendors. Hence, commercial banks are unwilling to invest
in such a risky business with high default rates. ADMARC and Afrisian Limited recently
experienced huge default rates. In 2020, Afrisian Limited reported a loss of K16 million
(US$19,762.50) on which farmers defaulted because much cotton was sold to vendors who
in turn sold to Afrisian Limited. In 2021, Afrisian Limited disbursed K180 million
(US$222,328.09) as loans (farm inputs) to smallholder farmers in designated zones of
operation and had not yet completed loan recovery by early July. If the market were
structured like tobacco, ginners would have recovered their loans through commercial banks.
For example, Standard Bank of Malawi indicated to CCM that it is ready to offer cotton
production loans only if the seed cotton market is structured like the tobacco auction floors.
In the tobacco sector, large commercial companies produce and manage contracts with
smallholder farmers who all sell their tobacco on four auction floors provided by the Auction
Holdings Limited (AHL), which is formed by a group of companies that trade in agricultural
inputs, purchase, and re-handle tobacco on auction floors. After sales, AHL settles payments
to growers through given bank accounts. The Tobacco Export Association (TEAM) of Malawi
is the grouping of buyers of tobacco at the auction floors. TEAM also buys tobacco on the
action floors on contract arrangement from growers (smallholder farmers and commercial
producers) at agreed prices for defined grades of tobacco. All the proceeds from tobacco
24
sales to the smallholder farmers are paid through commercial banks, which makes it easy to
recover loans. This is not the case in the cotton sector where there are fewer large producing
companies. The National Agriculture Investment Plan for 2017/18-2022/23 has prioritised the
development of the cotton market to the standard of tobacco where all buyers come to the
auction floor.
Issues related to the structure of the cotton market that impede financing are compounded
by the lack of financial technologies. Digital financial tools have not yet penetrated the Malawi
cotton industry. Use of mobile money or electronic payment is limited in the cotton sector
because of the cost of transactions. Most cotton producing areas are located far away from
banks and other mobile banking services. Farmers said that use of electronic payment was
not in their best choice because the commission paid per transaction was high. They cited
the following example: assuming a farmer has sold seed cotton of K100,000 (US$123.52)
electronically, the farmer is faced with two options, to travel to the bank or nearest mobile
money agent. Travelling to and from the bank, the farmer spent K5000 (US$6.18). If he
decided to cash K100,000 through a mobile bank agent or mobile money agent, the farmer
would pay a commission of K3250 (US$4.01) to the agent, which is an additional loss of
income. Even if money were cashed at a mobile money agent, the farmer would still have to
travel to a town or urban area to buy essentials, which would raise the cost of the mobile
money transaction.
3.7 COVID-19 and cotton production

The COVID-19 pandemic has negatively impacted the economic growth and livelihood of
Malawi. According to the rules of the Public Health Act, cotton production is essential, but
COVID-19 guidelines and restrictions on movement curtailed the regular services provided
by cotton extension workers to smallholder farmers. Due to restrictions on nonessential travel
and movement and the lack of prior preparation, farmers found it hard to monitor fields,
access input supplies such as fertilisers, disease and pest control inputs, and improved
seeds, all of which are crucial to secure or maintain agricultural productivity. COVID-19 also
heavily disrupted trade in agricultural inputs and products. Since the economy of Malawi
largely depends on agricultural exports, the disruption in world markets in 2020 led to
significant decreases in returns.
Workplace guidelines included complying with physical distancing rules, reduced seating
capacity in vehicles by 50 per cent and restriction in face-to-face meetings. Due to COVID-
19 restrictions on gathering, the opening of the seed cotton market was delayed by a month
and opened only in June 2020. To cope with COVID-19 restrictions, the Ministry of Agriculture
25
and other stakeholders promoted access to agriculture advisories using radios, print media,
video, mobile vans, and social media (e.g., WhatsApp). However, the use of electronic media
brought in new gender-related inequalities as men have more control over WhatsApp phones
than women at the household level, where more men own the telephones.
The replacement of face-to-face meetings by online meetings brought its own challenges as
Government staff struggled with connectivity and access to the resources to buy data
bundles for subscription to internet providers. Internet was required to enable them to work
at home and participate in online meetings. Connectivity issues were gradually resolved as
everyone had to adjust to the ‘new normal’. Despite that, online meetings privileged the
wealthy, while neglecting farmers in rural Malawi and exacerbating inequalities due to the
digital divide. Most smallholder farmers are not connected to the Internet and other
information and communication technologies that support online meetings. Besides, farmers
live far away from the power grid and good internet infrastructure.
Food supply chains functioned well in the first half of 2020, but later got affected after
lockdowns in South Africa, Zambia and Zimbabwe. Malawi imports most of her processed
foods. Therefore, lockdowns have affected the food supply chain. Some stocks were not
available on counters because of food import disruptions. Imported food prices for edible
oils, for example, have gone up by 62 per cent. Prices for fertilisers have gone up by 70 per
cent, which is likely to affect crop production in the 2021/22 season.
As a result of the reduction in seating capacity in public transport by 50 per cent, fares of
minibuses and other public transport has doubled. Passengers are asked to pay US$1.6 for
routes that previously cost MWK600 (US$0.8). In turn, the price of commodities on the market
went up because of the rise in transport costs. The current tendency is that after selling seed
cotton, farmers travel to the nearest town or urban area to save on transport costs and buy
clothing, agricultural inputs, groceries, food supplies, and access banking services. However,
the increase in transport costs affected the movement of farmers to such a degree that they
meet fewer of their basic needs than they did before the COVID-19 pandemic.
26
Chapter 4. The cotton by-products landscape
in Malawi
This Chapter analyses cotton by-products that the study has identified as those with the
highest potential in Malawi, as informed by policy prioritisation, private sector business
strategies, farmers’ perceptions, and the SWOT analysis presented in Table 3. These are
cotton seed oil (edible oils), cotton cake, linters, and cotton stalk, some of which are currently
being produced to a limited extent, or have already been produced but now been
discontinued due to impediments such as insufficient volume of seed cotton. The chapter
presents under each by-product a stakeholder analysis.
Table 3: SWOT analysis of the Malawi cotton sector to assess the potential of
by-products
STRENGTHS WEAKNESSES
- CCM board composition has powerful
- Legal and policy framework that
members with vested interest in the
governs the cotton value chain
cotton sector
- Established regulatory authority (CCM)
- CCM is in the infancy stage
- Edible oil manufacturing companies
- CCM is carrying out roles outside its
crush cotton seed and make cotton oil
mandated area
cake
- Weak extension service delivery
- By-product production as poultry and
- Challenges linked to seed research and
livestock feed from soybean and
seed oil development
sunflower
- Market arrangements and pricing
- Seed oil millers have 500,000 MT
- Farmer organisation still at infancy
capacity and 250,000 MT refining
- Difficult to access financing by
capacity per annum
smallholder farmers
- Demand for seed oil is high
- Corruption and fraud in cotton sector
- Ginners are available
- Low cotton production and productivity
- Bioenergy demand for cooking and
- Cotton seed is expensive on the local
industry is growing
market
- Sufficient land available for cotton
- Low oil yield per kg of crushed cotton
production
seed
- Well-organized farmers (COFA)
- Unfavourable tax regime compared to
SADC and COMESA edible oil market
- Undeveloped markets for by-products
e.g. livestock
- Policy & legal framework gap on by-
products
- Lack of set standards governing
production of by-products, except for
seed oil. This also starts at the
production level: the commodity
determines the value of the product.
- General lack of knowledge on cotton-by
products
- Lack of mechanization for production
27
STRENGTHS WEAKNESSES
- Lack of incentives (tax and non-tax) for
the sector
- Lack of extension backup services.
Farmers are unaware of best production
practices/technologies, leading to high
production costs
OPPORTUNITIES THREATS
- Unstable export market prices
- Cotton is prioritised by several policies
- COVID-19
as an important economic sector
- Cheap cotton products and by-products
- Potential to produce over 100,000 MT
imports
of seed cotton
- Cotton pest and diseases
- Market of cooking oil and crude oil is
available locally and on export market
- Demand for animal feed is high in
South Africa and the SADC region
- Demand for feminine hygiene, baby
hygiene and pharmaceutical products
(bandages, wool and swabs)
- Shire Valley Transformation project
4.1 Cotton seed oil

Estimate of production potential
Malawi has become dependent on imported food products despite government policies that
promote domestic food production and agro-processing. The total value of food imports
more than doubled in the last decade. Following a large spike in food imports of about 64 per
cent between 2015 and 2016, the country ended up with a food trade deficit of MK10.13
billion (US$13.59 million) in 2016 and MK10.86 billion (US$14.58 million) in 2017 (Munthali et
al., 2021). Edible oils are among the 12 broad food categories that dominated Malawi’s food
imports.
Cotton seed has lower oil content relative to most other key oil seeds, apart from corn (Figure
4). Ranked by its oil yield per unit of land, cotton seed averages 325 litres per hectare, which
is twice as much as corn. However, other edible oil seeds have much higher yields, the
highest being palm with almost 6,000 litres of oil per hectare.
28
Figure 4: Average oil yield of key oil seeds (in litres of oil per hectare)
5950
2689
1892
1212 1190 1059 952
446 325 172
Palm Coconut Jatropha Olive Rapeseed Groundnut Sunflower Soybean Cotton Corn
Source: Baffes (2010)
Research efforts that have only focused on maximising the quality and quantity of lint rather
than on oil are partly to blame for the low oil content of cotton seed in Malawi. The Makoka
Research Station breeding programme has no objective on improving the oil percentage of
cotton seed. As a result, it is not the preferred choice of processors like Capital Oil Refining
Industries Ltd (CORI).
The majority of cooking oil-producing firms import crude oil to refine locally. Beyond officially
recorded food imports, Malawi is experiencing unregulated food imports from neighbouring
countries (Zambia, Mozambique, and the United Republic of Tanzania), including cooking oil,
because of high local prices. Following an increase in local cooking oil prices due to the
imposition of a 16.5 per cent Value Added Tax (VAT) on refined oil in May 2021, Malawi
started to witness a new wave of oil sales on unregulated markets along its border with
Mozambique. In May 2021, a truck carrying alleged smuggled cooking oil from Mozambique
was exposed after it got involved in an accident near Blantyre. 15
The NAIP, NES, NAP and MCDS have all prioritised seed oil as a potential cluster for
agricultural transformation, local job creation and export. The total demand for refined
cooking oil in Malawi is 100,000 MT per annum, of which 60 per cent is for palm oil and 40 per
cent for soybean oil. Soybean and sunflower production are 250,000 MT per annum, while
70,000 MT is smuggled into the country every year. The soybean and sunflower seed
available to local crushers and animal feed producers is 180,000 MT, of which crushers use
140,000 MT per annum. From 140,000 MT of oil seed, 25,200 MT of crude oil can be
produced, which yields approximately 23,000 MT of refined oil. Crushing capacity is 500,000
MT and cooking oil production capacity is 250,000 MT per annum. While producers are
15
https://www.nyasatimes.com/truck-accident-along-chileka-magalasi-road-exposes-cooking-oil-smuggling/
29
crushing below capacity, crude oil is being imported to meet annual refined cooking oil
demand. Refined palm oil is sold in rural Malawi because it is cheaper than soybean oil.
Analysis of market for cotton seed oil

Most edible oil markets are highly integrated with each other. Global production of the seven
major oil seeds – soybeans, rapeseed, sunflower, peanut, cotton seed, palm kernel and
coconut – averaged 585 million MT in the period 2016/17 through 2018/19 (ITC, 2020). Cotton
seed ranked fifth, averaging at 42.5 million MT. Although the contribution of cotton seed oil
to edible oils is small, most are close substitutes for each other. Therefore, the examination
of the market for any edible oil should take into consideration all the (relevant) edible oils.
Thus, policies targeting one edible oil market will inevitably affect all edible oil markets.
According to the International Cotton Advisory Committee (ICAC), the largest exporters of
crude oils in 2018 were the United States, Malaysia, Kazakhstan, South Africa, and
Turkmenistan. CORI imports crude oil from Japan, China, Egypt, Ghana, Zambia, Uganda,
Kenya, India and others. It has also imported cotton seed from Zambia. In 2019, Malawi oil
seed imports amounted to US$3,3 million. Exports of oil seeds included groundnut (US$28.4
million), soybean (US$6.1 million), cotton seeds (US$1.7 million) and sunflower seeds (US$0.5
million). Hence, cotton oil has potential in Malawi. The fact that animal and vegetable fats are
the second-largest imports next to cereals suggests that crushing cotton seed is a viable
business. The fats from cotton oil could also become ingredients for making soaps and
margarine.
Stakeholder analysis relative to oil by-products

The Edible Cooking Oil Association of Malawi (ECOAM) is an umbrella body of companies
manufacturing edible oils. Market share of the five players in the industry is as follows: Capital
Oil Refining Industries (CORI) Limited, 22 per cent; Sunseed Limited, 22 per cent; Meru, 20
per cent; Agri Value, 20 per cent; and Moti Oil Mills Limited, 16 per cent. Crushing capacity
is presently underutilised, which gives room to absorb additional cotton seed oil crushing and
refining.
There is a need to enhance the relationship of stakeholders in the edible oil value chain in
order to bring back cotton seed into crushing and refining. Oil seed crushers and ginners are
business entities, and profit making remains their top priority. Thus, they control the local oil
seed market and have a high impact on cotton seed crushing because they have state of the
art equipment for refining seed oil that meets required standards for human consumption.
The risk is that they may be less willing to invest in cotton seed crushing because of the low
oil yield of cotton seed and access to cheap crude oil imports. However, round table
30
engagements with ECOAM may yield positive results because some crushers like CORI
milled cotton seed oil in the past.
Ginners play a significant role in the development of cotton seed oil by-products as they buy
seed cotton and extract cotton seed through the ginning process. The only risk is whether
they are willing to accept a price premium on the seed when buying from smallholder farmers,
as seed has not been priced over decades. Meanwhile, ginners do sell cotton seed on the
export market and at times on the domestic market. Cotton seed generally fetched better
prices on the export market. Hence, the tendency of ginners was to offer high prices to local
crushers to prohibit millers from buying the cotton seed. The high price plus low oil yield of
cotton seed made crushers opt for soybean, sunflower and other crude oils. Engagement of
ginners with COFA, MoA and CCM on the price factor of cotton seed is necessary to establish
a fair price that considers the value of the seed as a by-product.
Smallholder farmers’ (producers) expectation is to have the seed factored into the price of
seed cotton that they sell to ginners. Their withdrawal from cotton production is already
having a high impact on cotton seed value chain development since seed volumes are
directly related to cotton production volumes. Although MCDS has planned to increase
cotton production, smallholder farmers may not be willing to invest in cotton given the history
of low seed cotton prices. Therefore, setting a fair price for seed cotton to include cotton
seed prices in contracts between ginners and farmers is important to stimulate cotton
production in Malawi. Another mechanism that should be explored is to strengthen farmer
organisations so that they own ginneries to process their seed.
The Government of Malawi, through CCM, is responsible for creating an enabling business
environment and strengthening public-private dialogue by setting the regulatory and policy
framework on cotton. Although the government has put in place numerous laws and policies
on trade, agricultural production, and industry, challenges remain with regard to the tax
regime imposed on domestic seed oil manufacturers and supporting them in terms of raw
material supply. The Cotton Act needs to set rules related to cotton seed marketing to ensure
that ginners sell a proportion of their cotton seed to local seed crushers at an attractive price.
The Cotton Act should also be reviewed to include cotton seed as a commodity that can be
sold. Figure 5 provides a visualization of the stakeholder analysis of the edible oil sector.
31
Figure 5: Stakeholder analysis of the edible oil sector
•Their priority is business profitability through edible oil business on

domestic and export market.
•They undertake cotton seed crushing, buy all cotton seed in
Oil seed / Cotton ginneries and invest in modern technologies for removing the
seed crushers enzyme gossypol in oil & animal feed.
•They may not invest in cotton seed due to low oil yields.
•They can engage with oil seed miller’s association in technical
working group on oil seed development.
•They seek to maximize profits from cotton seed.

•They have experience in the cotton seed business and setting the
price factor for cotton seed when buying seed cotton.
•They may not be willing to set the price factor of cotton seed when
Ginners buying seed cotton.
•They may offer exorbitant price of cotton seed to cotton seed
crushers.
•They can engage with COFA, MoA & CCM when setting price factor
of cotton seed to seed cotton price.
•They may earn extra income from cotton seed.

•They need to increase production of seed cotton to >100,000MT.
Smallholder
•They may not invest in production given low prices of seed cotton.
farmers •They require setting a price for cotton seed, being informed in
advance, and signing an attractive contract with package of inputs.
•Provides cotton seed regulatory framework.

•Creates enabling agribusiness environment and strengthens public-
private dialogue through regulatory and institutional frameworks for
cotton.
Government •Risk of not revising Cotton Act and related policies to include cotton
seed as a commodity to be sold to ginners.
•Can form Technical Working Group on regulation and institutional
review.
4.2 Cotton cake

Cotton seed cake is a solid mass residual product obtained after the oil is extracted from the
cotton seed. Table 4 provides the list of top exporters and importers of cotton seed oil cake
and other solid residues in 2019. The top five exporters were the United States, Benin,
Greece, the United Republic of Tanzania, and Burkina Faso. The top five importers were
Mexico, South Africa, India, Lebanon, and Senegal 16. At regional level, Malawi was the fifth
16
OEC https://oec.world/en/profile/hs92/cotton-seed-oil-cake-and-other-solid-residues
32
largest supplier of oil cake to SADC in 2013, with a volume of 29,124 MT. Its key product was
cotton seed cake and main export market was South Africa 17. It should be noted that these
exports took place during peak cotton production with the help of CPUM. In addition, ginners
such as Afrisian Limited and ADMARC export their cotton seed to South Africa where cotton
seed crushers remove gossypol and produce high quality cotton cake to feed ruminants.
Table 4: Top 10 net exporters and importers of cotton seed oil cake and other
solid residues in 2019
Top 10 Exporters in 2019 (US$) Top 10 Importers in 2019 (US$)
United States Mexico

29,055,743 23,540,640
Benin South Africa
14,804,345 12,793,958
Greece India
11,367,907 8,206,006
The United Republic of Lebanon
Tanzania 10,687,755 8,121,598
Burkina Faso Senegal
6,934,188 5,910,390
India Syrian Arab
6,639,058 Republic 5,248,865
Azerbaijan Republic of Korea
5'510'538 5,117,967
Kazakhstan China
5,238,421 4,926,520
Argentina Turkey
4,448,442 4,865,255
Zimbabwe Uzbekistan
3,961,585 4,509,515
Source: The Observatory of Economic Complexity
The local market for cotton seed cake is relatively small and under development. Cotton
producing districts are also cattle rearing districts in Malawi, where cattle farmers graze their
cattle on free range with no supplementary feeding. Interviews with Gwirawekha Ranch,
Sangiza Farm, Africa Cattle Farm, Zachilomwe Farm, Khama Cattle Ranch, Majoti Farm, and
Ekhaya Farm revealed that they feed their cattle with sunflower oil cake and pigeon peas
because edible oil millers no longer produce cotton oil cake. There are large ranchers in
Chikwawa district who used to feed their cattle with cotton oil cake on a limited scale.
Similarly, in Karonga, a local cattle farmer once bought cotton seed to feed his cattle. The
experience of other countries in the region confirms that cotton oil cake is challenged by the
17
https://mitc.mw/trade/images/Regional_Oilcake_Demand_Executive_Summary_141202.pdf
33
enzyme gossypol which inhibits absorption of nutrients, especially for cattle. This issue was
not mentioned by interviewed processors and ranchers.
The main threat facing cotton seed cake is lack of cotton cake production by oilseed miller
companies in Malawi. Ranchers argued that if there was no production of cotton seed oil,
obviously, there would be no cake for cattle. Malawi needs to establish the baseline data on
the actual demand and challenges for cotton oil cake which can inform research on potential
by-product development. Investors could take advantage of ECOAM member companies
that are already in the feed making business for poultry and ruminants from soybean and
sunflower as an opportunity to build upon for cotton cake manufacturing and marketing.
Stakeholder analysis relative to cake by-products

The stakeholder analysis in Figure 6 shows that cotton oil cake production depends highly
on cotton seed crushers (seed oil millers). The fact that they are less willing to reinvest in
cotton seed crushing for oil means that production of cotton oil cake may not be sustained.
However, oil crushers blame the lack of adequate cotton seed and low oil yield of cotton seed
per kilogram of seed crushed. This gap calls for investment in research to improve cotton
seed oil yields. As a result, the cotton seed produced in Malawi ends up being exported to
South Africa for crushing and cotton oil cake production. This situation does not have a
negative impact on the business of ginners as they continue to earn income from seed
exports despite the absence of domestic cotton seed crushers. Exporting unprocessed
cotton seed is equivalent to exporting hundreds of jobs. Hence, it is in the interest of small
and medium-sized enterprises to manufacture and trade soap that is derived from cotton
seed.
Key issues of the stake, impact, needs, risk and management strategy remain the same for
smallholder farmers and the government as in the case for oil by-products (see section 4.1
above).
34
Figure 6: Stakeholder analysis of the cotton oil cake sector
• They seek profitability from cotton cake marketing on domestic and

export market.
• They need to invest in modern technologies to remove the enzyme
Cotton seed gossypol in animal feed.
crushers • They may not invest in cotton seed meal if there is insufficient supply
of cotton seed to meet economic investment.
• They can engage with oilseed miller’s association in technical
working group on oil seed development to produce cake.
• They seek to maximize profits from cotton cake, and invest in cake
production business.
• They have experience in the cotton seed business and setting the
price factor for cotton seed when buying seed cotton.
Ginners
• They may not be willing to set the price factor of cotton seed when
buying seed cotton.
• They can engage with COFA, MoA & CCM when setting price factor
of cotton seed to seed cotton price.
• They may earn extra income from cotton seed.

• SMEs have an interest in soap manufacturing and trading.
Smallholder • They need to increase production of seed cotton to >100,000MT.
farmers • They may not invest in production given low prices of seed cotton.
• They require setting a price for cotton seed, being informed in
advance, and signing attractive contract with package of inputs.
• Provides cotton seed regulatory framework.

• Creates enabling agribusiness environment and strengthens public-
private dialogue through regulatory and institutional frameworks for
cotton.
Government
• Risk of not revising Cotton Act and related policies to include cotton
seed as a commodity to be sold to ginners.
• Can form Technical Working Group on regulation and institutional
review.
4.3 Cotton linters

Linters are fuzzy short fibres which form a dense mat that adheres to the surface of cotton
seed. Every ton of cotton seed can generate around 75 kilograms of linters (ITC, 2020). Linters
are removed from the seed surface by de-linting machines. Based on the de-linting process
adopted, linters are classified as first cut, second cut, and mill run. The high-grade pulp is
good raw material for preparing viscose grade fibres, cellulose acetate, cellulose nitrate,
35
specialty grade paper and microcrystalline cellulose. Cotton linters can potentially be used
to make various pharmaceutical products including hospital wool and feminine hygiene
products (United States Department of Agriculture, 1995). During the cleaning of cotton
linters, about 20 per cent of dust is generated, which contains a high percentage of lignin
(from seed coat fragments), apart from cellulose, pectin and ash. It has been found that this
material can be fed directly into cow dung-based biogas plants to obtain better methane
production. Even through batch digestion of this material, it is possible to produce about 600
litres of biogas per kg with a 45-day retention time. The methane content would be around
60 per cent.
In Malawi, linters are not utilised to manufacture by-products. However, Mapeto David
Whitehead and Sons (DWS) Limited manufactures ropes used in tobacco and cotton bailing.
Some common medical by-products used in Malawi are bandages, cotton buds and cotton
balls. During oral interviews, ADMARC revealed that manufacturing medical supplies from
linters was one of the bankable businesses they were working on for the near future.
Currently, most of the linters they produce are either exported or destroyed, resulting in a
missed opportunity. Furthermore, there is a growing market for use of linters in sanitation, 18
feminine hygiene and baby hygiene. Sanitary products available on the market include
sanitary napkin, sanitary towel, sanitary pad, menstrual pad, and maxi pad. Although the
market of sanitary pads was yet unquantified in Malawi, there is much to learn from the South
Africa sanitary pad market, as Malawi imports most of its sanitary products from South Africa.
It is essential for companies to actively plan their ventures into the sanitary pads (feminine
hygiene) market due to the ongoing large-scale uncertainties induced by the COVID-19
pandemic. Frequent lockdowns are likely to create a shortage of sanitary products because
of the closure of industries and restrictions on the movement of goods. Hence, it is important
for the government to provide an enabling operating environment in the market for sanitary
pads. Purity Malawi is already in the sanitary pad manufacturing business 19. The Malawi
Government may facilitate venture capital access for companies such as Mapeto (DWS)
Limited, which are working on the feasibility of diversifying into the booming feminine and
baby hygiene products market. It is also essential for Malawi to become more self-sufficient
through the domestic production of sanitary pads, so that the supply of such essential
products is resilient to market shocks like the one experienced due to COVID-19 lockdowns.
18
Sanitary Pads (Feminine Hygiene) Market in South Africa - Outlook to 2025; Market Size, Growth and Forecast
Analytics (updated with COVID-19 Impact). https://www.marketresearch.com/GlobalData-v3648/Sanitary-Pads-
Feminine-Hygiene-South-14518305/
19
Purity Company. https://www.puritymalawi.mw/products-napkins.html
36
Analysis of market for cotton linters

Potential markets for linters have been identified in China, Singapore, India and the SADC
countries. The demand for felting linters is directly related to the demand for bedding,
furniture, and automobiles, which are major outlets for such linters. In 2019, top exporters of
cotton linters pulp were United States, China, and Uzbekistan, while top importers were
European Union, Republic of Korea, and Japan. 20
Malawi has been exporting cotton linters since 2007 (Figure 7). During the seasons 2011/12,
2012/13 and 2013/14, the country experienced its highest seed cotton production levels with
average yields for the three seasons of 148,000 MT. This explains the high export of linters
in that period, because peak levels of cotton production led to the availability of high volumes
of linters after ginning. Linters exports reached US$10 million in 2013, but then dropped as
of 2015 through 2017, in parallel to the fall in cotton production. Exports of linters started to
pick up again in 2018. 21 Major importers of linters from Malawi between 2007 and 2019 were
Zimbabwe, Bangladesh, United Arab Emirates and Thailand.
Figure 7: Malawi exports of cotton linters

12000
10000
8000
6000 1000 US$

tonnes
4000
2000
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: FAOSTAT
20
World Integrated Trade Solution
https://wits.worldbank.org/trade/comtrade/en/country/ALL/year/2019/tradeflow/Exports/partner/WLD/product/4
70610
21
FAOSTAT 2018. http://www.fao.org/3/ca7239en/ca7239en.pdf
37
Stakeholder analysis relative to linters

Linters development in Malawi has so far been at an embryonic stage because a very narrow
range of products is marketed. The only manufacturers are Mapeto (DWS) Limited and Purity
Malawi, which produce ropes and menstruation pads, respectively. The linters stakeholder
analysis in Figure 8 shows that there is a need for linters by-product manufacturers to scale
up and diversify their product range into medical/pharmaceutical, feminine hygiene, baby
hygiene products and ear buds, because these have been found to have a growing domestic
market amidst COVID-19. Once the manufacturing sector is developed, it will stimulate the
domestic market for linters. Ginners will benefit from the growth of the domestic market, and
the benefits will trickle down to smallholder producers through employment creation for
women, youth, and men. The suggested strategy to engage with existing and potential linters
manufacturers is to facilitate the development of bankable businesses that can be funded by
financial institutions.
The development of the linters value chain will build upon the vast experience of ginners who
are to ensure that linters of sufficient quality and quantity is produced for the manufacturers.
The risk in working with the ginners is that they may not disclose the true value of linters to
smallholder producers because, for a long time, the seed cotton price only took into account
the lint, while cotton seed was not embedded in the price. Therefore, there is no guarantee
that value addition in linters will result in higher seed cotton prices to the benefit of
smallholder farmers. CCM and COFA should engage with ginners to raise the price of seed
cotton to factor in cotton linters, just as for cotton seed oil.
Key issues remain the same for smallholder farmers as in the case for oil and cake by-
products (see section 5.1 and 5.2 above). SMEs have a business interest in manufacturing
and trading bandages. The government is expected to contribute its fair share by working on
regulations governing cotton linters since the present regulatory framework is obsolete. The
Cotton Act of 2013, agricultural policies and trade and industrial policies are not aligned fully
with Malawi Vision 2063, which aspires to the objective of an inclusively wealthy and self-
reliant industrialised upper-middle-income country by the year 2063 that can primarily fund
its own development needs. The regulatory framework needs to allow indigenous Malawians,
including smallholder farmers, to participate in profitable segments of the linters value chain.
The likely risk is that buyers of seed cotton alone may capture the review process and
influence the regulatory framework to address their needs alone, and not the long-term
aspirations of Malawi Vision 2063.
38
Figure 8: Stakeholder analysis of the linters sector

• The sanitary pads and ropes business is motivated by profit-making on the
domestic market.
• They can scale up and diversify into medical, pharmaceuticals, bandages,
cotton buds, and cotton balls.
Linters
manufacturers • They are willing to venture into the linters business, but there is the risk that
they may not find financing for such an expansion. COVID-19 may also affect
the growth of their business.
• They can engage ADMARC, Mapeto (DWS) Limited, Purity Malawi and others to
fine-tune business idea towards implementation.
• They would like to maximize profits from cotton linters and invest in value
addition to linters.
• They have experience in the local and export market, and in business
investment plans.
Ginners
• They may not be willing to disclose business secrets to producers in fear of
trickling back effects in terms of good seed cotton price.
• Involvement in Project Steering Board, regular update meetings with project
leader.
• They can earn extra income from cotton linters.

• SMEs have an interest in soap manufacturing and trading.
Smallholder • They need to increase production of seed cotton to >100,000MT.
farmers • They may not invest in production given low prices of seed cotton.
• There is a need to recruit more farmers and provide an attractive contract with
package of inputs.
• Provides cotton linters regulatory framework.

• Creates enabling agribusiness environment and strengthens public-private
dialogue through regulatory and institutional frameworks for cotton.
Government
• Risk of buyers of seed cotton capturing the review process to address their
needs against the aspiration of Malawi Vision 2063.
• Can form Technical Working Group on regulation and institutional review.
4.4 Cotton stalks

Cotton stalk by-products are produced from biomass that becomes available after the
harvest of seed cotton, which is rich in cellulose, hemicellulose and lignin. The cotton stalk is
akin to most hardwoods, and therefore an excellent raw material for preparing composite
boards, pulp and paper, and raising edible oyster mushrooms. In the United Republic of
39
Tanzania, Uganda, Zambia and Zimbabwe, cotton stalks are used for producing briquettes
and pellets that provide the fuel needed for cooking.
Briquetting can be defined as the process of converting low bulk density biomass into high
density and energy concentrated fuel briquettes. The process of translating biomass into
solid fuel involves drying, cutting, gridding and pressing with or without the aid of a binder
(Lavanya et al., 2018). Stalk briquettes can be used as raw material when combined with coal
or firewood to produce high quality fuel. Stalk briquettes are also environmentally friendly, as
they do not produce as much smoke compared to charcoal (Nkomo, 2018).
Malawi has a population of over 18 million, of which only 11 per cent has electricity access
(42 per cent of the urban and only 4 per cent of the rural population). 22 Demand for bioenergy
for cooking and industrial uses is high. Food and cooking energy are inseparable at the
household level. Bioenergy is also used in boarding schools, and the tobacco and tea
industry for curing (drying after harvesting the tobacco leaves from the field). Energy needs
for cooking are mostly served by charcoal and firewood. The feasibility study found that
98 per cent of smallholder farmers’ energy was supplied by biomass. Cotton stalks supplied
some of the needed cooking energy where natural wood was scarce. Smallholder farmers
who were involved in fishing in Lake Malawi used cotton stalks as fuel for drying fish. The
majority of smallholder farmers left cotton stalks in the field and burned them as guided by
the Cotton Act of 2013 ‘closed season’ rule. While the cotton stalks were in the cotton field,
cattle fed on them. Other uses of cotton stalks, such as making briquettes and particle boards
were self-taught by some smallholder farmers.
Briquettes and pellets manufacturing have potential in Malawi because the policy and legal
framework that promotes commercially viable briquette/pellet production is already in place.
The Malawi National Charcoal Strategy 2017-2027 23 aims to professionalise and regulate the
charcoal value chain based on a business model. The strategy builds market linkages to
proximate industrial and institutional buyers (e.g., tobacco estates, hospitals, schools, etc.).
Malawi exports particle boards and similar boards of wood and other ligneous materials to
South Africa. 24 Export markets for fibre boards are South Africa, Namibia, Zambia and
Botswana. The only domestic competitor in South Africa is PG Bison. Raiply Limited is a
Malawian company that manufactures biomass briquettes and pellets using timber waste
22
Sustainable Energy for All. 2021. SEforALL Africa Hub. https://www.se4all-africa.org/seforall-in-
africa/country-data/malawi/. Accessed on 12 September 2021.
23
National Charcoal Strategy 2017–2027. Ministry of Natural Resources, Energy and Mining
24
United Nations COMTRADE database on international trade.
https://tradingeconomics.com/malawi/exports/south-africa/particle-board-board-wood
40
such as sawdust, wood cuttings and wood offcuts. It is an Export Promotion Zone (EPZ)
Company with guidelines to export 80 per cent of production and use 20 per cent for the
domestic market. The domestic target market for Raiply Limited includes tobacco
companies, hospitals, schools and tea estates that use coal for energy. Raiply produces and
exports medium density fibre particle boards (density of 590-800kg/cubic metre). There are
also small/medium scale briquette and pellet producers distributed across the country.
Farmer organizations in cotton-growing districts should explore partnerships with
commercial companies such as Raiply to utilize cotton stalks, in line with Malawi National
Energy Policy (2018) Priority 2 on Biomass: “Government will build strong partnerships with
the private sector and NGOs (including PPPs) to promote the manufacture, supply, use and
financing of biomass briquettes and pellets”. 25
The Food and Agriculture Organization Bioenergy and Food Security (BEFS) study in Malawi
identified that different briquette investment models (manual technology and more advanced
piston technology) may be adapted for smallholder farmers, middle income
households/groups and commercial producers (FAO, 2018a). Larger producers may build on
their existing financial capacity and experience to expand their business in briquettes, but
the challenge would be the limited supply of cotton stalks to operate the manufacturing
machine with a capacity of 2.5 MT per hour throughout the year. The management strategy
at both smallholder farmer and commercial producer level would involve the promotion of
diversification to bring in other types of wood and agricultural waste to supplement the cotton
stalk supply in the factory. The FAO study outlined the number of jobs that could be
generated by briquetting plants of different size and complexity, as well as investment needs.
A more comprehensive analysis of the investment profiles of required infrastructure for cotton
stalk-based by-products is foreseen in a potential second phase of the current feasibility
study.
Stakeholder analysis relative to cotton stalk by-products

Figure 9 provides the stakeholder analysis of the cotton stalk sector. Since firewood is
considered as cheap compared to other sources (such as electricity and briquette) and free
for the majority, there is a need for a mindset change of firewood consumers to consider
other forms of cooking energy. At the same time, particle board and medium/small-scale
briquette manufacturers are needed to guarantee availability of briquettes throughout the
year.
25
National Energy Policy 2018. Malawi Government.
41
The stake of smallholder farmers remains better income from cotton production, as before.
Briquette making is considered to have potential for job creation and extra income.
Smallholder farmers need to increase production of seed cotton, which would translate into
increased volume of cotton stalks for manufacturing particle boards and briquettes.
Therefore, smallholder farmers’ willingness to grow cotton is essential to investing in the
cotton stalk by-product value chain. Farmers need external financial support and training to
run briquette and pellet-making equipment such as crushers and compressors. The option
of blending cotton waste and other locally available woody materials was suggested to
ensure briquette production throughout the year.
Currently, the Cotton Act stipulates that all cotton residues in cotton fields must be uprooted
and burned. As a result, 75 per cent of cotton stalks are burned in the field, while 10 per cent
is used as firewood, 5 per cent is ploughed back, and 10 per cent is stacked on bunds (ICAC,
2021). The government needs to review the regulatory framework in the Cotton Act of 2013
to give provision for the use of cotton stalks as a by-product in manufacturing other wood
products and the supply of heating and cooking energy. This would help to build strong
partnerships with the private sector and NGOs (including PPPs), and enforce rules on the
consumption of briquette fuels. The main risk would be the failure to revise the Cotton Act,
and failure to create an enabling environment to invest in alternative sources of energy and
enforce rules on energy consumption. The suggested mode of engagement for the
government is to influence a mindset change on sources of cooking energy with cotton
farmers’ cooperatives, AICC and other NGOs in the energy sector, and local government, to
open up the briquette market in Malawi.
42
Figure 9: Stakeholder analysis of the cotton stalk sector
• They seek new business, export and profitability.

• They have expertise in wood engineering and briquettes.
Particle board & • They require large capital investment, but there is the risk of low supply of
briquette raw materials to match the investment, and distance from cotton producing
manufacturers areas to factories.
• They could bring in other types of woody materials to supplement cotton
stalk.
• They seek business profitability.

• They need to enhance production capacity to produce large volumes of
Medium & small- briquettes/pellets.
scale briquette
manufacturers • They need to invest in crushing equipment. There is a risk of change in
cooking energy market dynamics.
• They require external funding and linkages with financial institutions.
• They could earn better income from cotton production, and obtain extra cash
and employment from cotton stalks.
• They need to increase cotton production by growing the cultivated area for
Smallholder higher cotton stalk yield.
farmers
• They require capital to invest in briquette manufacturing.
• External funding and capacity building may be provided to small scale
producers.
• Establishes cotton use regulatory framework.

• Can review Cotton Act of 2013 to provide for a rule on use of cotton stalks
as by-products. Build strong partnerships with the private sector and NGOs
(including PPPs) and enforce rules on consumption of briquette fuels.
Government • Risk of not revising Cotton Act of 2013 to allow use of stalks as by-
products, not enabling a business environment for alternative sources of
energy, and not enforcing rules on energy consumption.
• Can work with COFA, NGOs and local government to influence mindset
change on sources of cooking energy.
43
Chapter 5. Recommendations
The study has shown that seed cotton production in Malawi has been on the decline for a
decade and hit its lowest point in 2021. The development of cotton by-products depends on
the performance of the whole cotton ecosystem, as well as each specific segment of the
value chain. For example, if seed cotton production is low, it means that production of linters,
cotton seed oil, and stalks will be low as well. Hence the study, considering KIIs, FGDs,
farmer perception as per survey responses and SWOT analysis, recommends the following
adjustments to the benefit of smallholder cotton farmers under legislation, government
support, cooperatives, and developing cotton by-product value chains.
Figure 10: How farmers can benefit more from cotton by-products
Legislation (regulatory framework, Government support (production

market and prices) and productivity)
Benefits for farmers
Developing by-product value chains

Forming cooperatives
through public-private partnerships
5.1 Legislation
Recommendation 1: Review the Cotton Act of 2013.
The current Cotton Act is limiting the development of by-products from cotton stalks and
cotton seed. The Cotton Act requires all cotton stalks to be burned after harvest, and does
not recognize the value of the cotton seed. It is important to amend the Cotton Act to provide
for stalks and cotton seed as products to be marketed by farmers. The amendment should
be accompanied by relevant guidelines on the use of cotton stalks. It should support the
development of domestic industry as well, so that the cotton stalk collected not only leads to
export income, but also meets local demand for briquettes and pellets.
Currently, the regulatory capacity of CCM is not sufficient to enforce the provisions of the
Cotton Act of 2013. CCM functions as an implementer and microfinance provider (giving
loans), which goes beyond its mandate as a regulator. Two recommendations are made: 1)
CCM should strengthen its technical, financial, and structural capacity by recruiting more
staff; and 2) CCM should discontinue the provision of loans and extension services.
44
Recommendation 2: Creation of an improved regulatory framework to allow for a

competitive cotton industry.
The seed cotton market is unstructured in Malawi. The fragmented market depends on
ginners who run several collection and buying centres close to the farmer. The bought seed
cotton is transported and weighed at the ginners’ weighbridge before warehousing. CCM has
no direct access to these weighbridges. The ginners’ declarations of bought seed cotton is
prone to under-declaration to reduce their levy remittances to CCM because of lack of robust
monitoring of market performance. Therefore, the cotton and by-products market should be
structured into one large commodity exchange market powered with digital technology.
Three structured markets are proposed as a pilot:
• Chikwawa and Nsanje should have an aggregation centre at Chikwawa
• Balaka, Mangochi and Zomba should have an aggregation centre at Balaka
• Salima and Nkhotakota should have an aggregation centre at Salima.
The following infrastructure will be needed at each aggregation centre: warehousing facilities,
weighbridge and forklifts, office buildings and equipment (computers, furniture), vehicles and
energy. CCM aggregation centres will thereby capture data on seed cotton and by-product
sales in real-time and collect levies and loan repayment on each kilogramme sold.
Recommendation 3: Reliable, stable and improved prices for seed cotton.

The Ministry of Agriculture, for three decades, has been setting minimum prices of agricultural
commodities, including seed cotton sold at ginneries. For example, seed cotton minimum
prices in 2021 buying season were set by the Ministry of Agriculture, CCM, COFA, ginners,
and AICC. The Ministry of Agriculture announces the Farm Gate price before the agriculture
produce markets open every year. Seed cotton prices have been based on negotiations
between grower representatives and ginners, with oversight from the Ministry of Agriculture.
The study observed that there are two major shortcomings in the current method of setting
minimum farm gate prices:
1) Gross margin calculation that uses the cost of production at the beginning of the season,
which is insensitive to changes in markets and the broader economy.
2) The involvement of ginners (buyers)/exporters of lint and cotton seed in setting prices.
Hence, guidelines on how to calculate the farm gate price should be revisited to make seed
cotton and by-product prices more responsive to market dynamics (input, logistics, etc.). The
study proposes the use of the inflation-adjusted input price before produce markets open in
May/June instead of relying on the input price at the start of the growing season in the
previous October, as is the case with the fuel pump price response to the broader market
45
crude oil prices. It is necessary to liberalize the agricultural commodity market to respond to
the broader market economy. Moreover, seed cotton pricing should include the price of
cotton seed and linters so that smallholder farmers can earn extra income. This will help bring
smallholder producers out of the vicious circle of poverty.
5.2 Government support (production and productivity)

Recommendation 4: Increase cotton production and productivity.
Cotton production and productivity are central to the development of by-products. At
present, the barriers to cotton production and productivity are poor timing of providing cotton
seed for planting and expensive inputs. The seed is brought on the market when smallholder
farmers had already spent their cash earned from seed cotton sales, so the timing is
counterproductive. The current price of K22,000 (US$27.08) per kg of cotton seed is
expensive in comparison to its productivity. Hence, 1) CCM and ginners should synchronise
cotton seed sales with the seed cotton market. Cotton seed should be sold alongside
pesticides. 2) The government should consider reducing the seed price by treating cotton
inputs in the same vein as fertiliser for maize production under the Agriculture Input
Programme (AIP). The government should ensure that the cotton seed market is functional,
and seed is available, accessible, and affordable to smallholder farmers.
Currently, there are few qualified staff that provide extension advisory services in the cotton
sector. The government should develop a vibrant and coordinated cotton extension system
to achieve widespread adoption of technologies towards increasing production. Recruiting
qualified extension staff by the government should be encouraged. Recruitment of extension
staff by the private sector and NGOs is also a positive development for the cotton sector and
should be regulated to ensure that required qualifications are met.
5.3 Cotton producers

Recommendation 5: Establish cooperatives for better bargaining in matters of
cotton marketing and commercialization.
Cotton is produced by smallholder farmers in Malawi, who are currently organised in the form
of clubs (associations) housed under COFA that obtain credit from ginners and organize the
sales. These clubs provide collateral and collective responsibility and enable extension
advisories to be provided more easily. However, they do not make it possible to add value
to cotton and its associated by-products. In this arrangement, the primary focus of farmers
is merely on seed cotton prices. Hence, COFA should be organized into cooperatives that
are legally recognised as business entities by the Ministry of Industry.
46
Unlike associations, cooperatives can undertake vertical integration and play the role of
cotton processor and trader as well. The main advantage of a cooperative is that it operates
for the benefit of its patron members. At the same time, since members are also the owners,
they have an interest in the success of the cooperative which sways them toward giving it
their full support and patronage. Cooperative members also have a voice in the control of the
organisation. Within the limits of majority rule, the cooperative supplies the kind of services
they ask for, such as guaranteeing credit or providing technical advice. The Ministry of
Industry Roadmap to transform the cotton sector aims to let cooperatives become
processors and exporters after learning from off-takers.
In addition to cooperatives, strengthening the inclusion of civil society organisations such as

AICC and FUM in cotton value chains would allow them to lobby and advocate for a
favourable legal and policy environment that promotes equitable business. They would be
useful in providing checks and balances on various policies and legal instruments promoting
the cotton business, so that smallholder farmers can earn extra income from cotton by-
products.
5.4 Developing by-product value chains through public-

private partnerships
Recommendation 6: Develop cotton by-product value chains through public-
private partnerships.
The study identified the following priority cotton by-products for Malawi:
1. The cottonseed oil value chain has potential. Imports of crude edible oils are high because
of shortfalls in the local supply from soybean, sunflower and groundnuts. Instead of
exporting its cotton seed, Malawi could utilize it in the local manufacturing of cooking oil
to offset part of the shortfall covered by crude oil imports. Edible oil manufacturing from
cotton seed has potential, based on the experience in 2016 on cottonseed oil crushing
by CORI and sale in supermarkets. Hence, it is highly recommended that CCM re-
engages with CORI.
2. Feminine and baby hygiene products have growing market potential in Malawi and SADC
as well. Much of feminine and baby hygiene products are imported into Malawi. Should
new pandemic waves occur in the future, the import of these products is expected to be
more challenging. Hence, domestic production should be promoted to meet demand.
3. Pharmaceuticals manufacturing is a potential value addition sector to meet the growing

demand for products such as bandages, absorbent wool, cotton buds and cotton balls
47
in hospitals and pharmaceutical companies. SMEs have prioritised bandage and soap
manufacturing and should be supported to invest in these two by-products in Malawi.
4. There is high demand for bioenergy as observed through firewood and charcoal demand.
PPPs are recommended to develop briquette and pellet by-products, and to run the
finance, management, manufacturing, and market development functions.
In terms of operationalizing the by-product value chains, the study identified that currently
there is low interest in by-product manufacturing by industry players, for example, cotton
seed crushers and cake manufacturers. PPPs are recommended to undertake research
towards improving cotton seed oil yields and develop technologies on gossypol extraction at
Makoka Research Station, and to invest in infrastructure in the feed and oil industry.
The government should develop a policy and regulatory framework on the by-product value
chains of cotton seed, cotton stalks and linters that is aligned with Malawi Vision 2063.
Government support is needed to ensure that domestic industries have enough seed to
operate their business. The Malawi Bureau of Standards should be an integral part of all
cotton by-product sectors to certify product standards for local and export markets.
48
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51
Annexes
Annex: 1: List of participants in Focus Group Discussions
No. Name Gender Position/Role
1 Lyness Sichali Female Chairlady (COFA)
2 Steward Kenedy Male Deputy Chairman
3 Francis Nasho Male Secretary
4 Kester Sichali Male Deputy Secretary (COFA)
5 Frighton Bishop Male Lead Farmer
6 Boxes Thomas Zuda Male Lead Farmer
7 Zefania Dyanjowo Female Lead Farmer
8 Charles Galliwao Male Farmer
7 Chiukkumbutso Mwanyama Female Farmer
10 Elias Wilson Male Farmer
11 Jenifer Moses Female Farmer
12 Tembo Geoffrey Male Farmer
13 Kafileni Elason Female Farmer
14 Sophilet Magaso Female Farmer
15 Gift Johnson Male Farmer
16 Enock Bishop Male Farmer
17 Isaac Felekeza Male Farmer
18 Snake Makina Male Farmer
19 Conex Ngalu Male Farmer
20 Amosi Dalani Male Farmer
21 Emily Josephy Female Farmer
22 Steven Wisitidi Male Farmer
23 Chimwemwe Gizimo Male Farmer
24 Robert Nasho Male Farmer
25 Dorice Tenison Female Farmer
26 Willy Namizinga Male Farmer
27 Damiano Haward Male Farmer
28 Matilda Besten Female Farmer
29 Zefania Magalasi Female Farmer
30 Alinafe Lamos Female Farmer
31 Jackson Chibowa Male Farmer
32 Benito Buwawa Male Farmer
33 Adrew Band Male Farmer
34 Jeremiah Kamfuti Male Farmer
35 Matias Boisi Male Farmer
36 Alfred Muoza Male Farmer
37 Cleva Ginio Female Farmer
52

38 Gideon Sawamba Male Farmer
39 Thomas Paulino Male Farmer
40 Assan Jeremiah Male Farmer
41 Sweet Gabrial Male Farmer
42 Gladys Mwanjamo Female Farmer
43 Daniel Kazinga Male Farmer
44 Matias Kabongo Male Farmer
45 Biswas Chiomba Male Farmer
46 Frackson Evetson Male Farmer
47 Piteti Mlenga Male Farmer
49 Nengo Retus Female Farmer
50 Feston Chabwera Male Farmer
51 Ellen Gondwe Female Farmer
52 Kwame Munthali Male Farmer
53 Laida Sichali Female Farmer
54 Margret Mwafuliwa Female Farmer
55 Vincent Mwambero Male Farmer
56 Ipyana Mwambero Male Farmer
57 Tionge Kosamu Female Farmer
58 Bornface Munthali Male Farmer
59 Nickson Kandono Male Farmer
60 Wiseman Sichali Male Farmer
Annex 2: Key Informant Interviews

Ministry of Agriculture
1 Martin Kausi Male Deputy Director Crops, Department of Crops
Development, MoA
2 Innocent Nkangala Male Deputy Director of Livestock Development,
MoA
3 Pearson Soko Male Chief Agribusiness Officer, Department of
Extension, MoA
4 Jassie Mvula Female Cotton Breeder, Makoka Research Station
Blantyre Agricultural Development Division

5 Erick M.K Haraman Male Programs Manager, BLADD
6 Getrude Msukwa Female Deputy Programme Manager, BLADD
7 Medson Thole Male Chief Land Resources Officer, BLADD
8 Geoffrey Maloni Male Divisional Crops Officer, BLADD
9 Getrude Kumwenda Female Principal Extension Methodology Officer,
BLADD
10 Patrick Alufandika Male Monitoring & Evaluation Officer, BLADD
53

Karonga Agricultural Development Division
11 Medson Chikweyeye Male Principal Crops Officer, KRADD
12 M.D.K Lowole Male Cotton Officer, Karonga DADO
Shire Valley Agricultural Development Division

13 J.D Mvula Male Principal Crops Development Officer, SVADD
Salima Agricultural Development Division

14 Elidah Kazira Female Programme Manager, SLADD
Machinga Agricultural Development Division

15 Mphatso Gama Male Chief Crops Development Officer, MADD
Ministry of Trade
16 Charity Msonzo Female Director, Ministry of Trade
17 Cuthbert Chirwa Male Chief Economist, Ministry of Trade
18 Agnes Kapokosa Female Accountant, Ministry of Trade
Ministry of Industry
19 Phangapanga Male Director, Ministry of Industry
20 Dickson Kazembe Male Chief Economist, Ministry of Industry
21 Philip J. Banda Male Ministry of Industry
Cotton Council of Malawi

22 Madaika Cosmus Luwanda Male Executive Director, CCM, Lilongwe
23 Prisca Jamali Female Cotton Inspector, CCM
Agricultural Development and Marketing Corporation

24 Michael James Mnenula Male Acting Director of Operations, ADMARC
25 P. Chilonda Male Ngara Cotton Ginnery, Karonga ADMARC
Afrisian Limited
26 Dinesh Chandra Pant Male General Manager
27 Ananda Shriyan Male Financial Manager
Farmers Union of Malawi

28 Jacob Nyirongo Male Chief Executive Officer, FUM
Cotton Farmer’s Association

29 Mbalafana Male Chief Executive Officer, COFA Malawi
54
Edible Cooking Oil Association of Malawi

30 Jayshree V. Patel Female Chairperson, ECOAM
31 Mohamed Ameen Nathanie Male Executive Director, CORI
Mapeto (DWSM) Limited

32 Martin Mpata Male General Manager, Mapeto (DWSM)
Commercial Livestock Farms

33 Issa Male Manager, Gwirawekha Ranch
34 Ishumael Male Manager, African Cattle Farm
35 Mpinganjira Male Manager, Ekhaya Farm
36 Chatama Male Manager, Zachilomwe Farm
Forestry Department, Mzuzu University

37 Elisha Nguluwe Male Lecturer, Forestry Engineer, Mzuzu
University
55

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UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT

Study conducted with the financial support

© 2022, United Nations Conference on Trade and Development

1.1 Background ............................................................................................................................... 1

2.1 Key institutions involved in cotton production....................................................................... 6

3.1 Seed cotton production trends ............................................................................................. 16

4.1 Cotton seed oil ........................................................................................................................ 28

5.1 Legislation ............................................................................................................................... 44

List of acronyms and abbreviations

NCFS ............. National Contract Farming Strategy

1.2 Objectives and methodology

2.1 Key institutions involved in cotton production

• Screening for jassid resistance 4 under unsprayed conditions;

• To contribute to the growth of the cotton industry through the development of

• To ensure adherence to fair trade practices by value chain players;

• To promote sustainable innovations and information sharing through a competent

2.2 Smallholder farmers

Cotton Farmers Association of Malawi (COFA)

Perception of smallholder farmers on cotton by-products

• The policy environment is unfavourable for cotton by-products development, as it

• Limited knowledge of the by-products market to stimulate production (100 per

• Lack of necessary equipment to produce by-products (10 per cent).

2.3 Ginners, oil seed crushers and textile manufacturers

Malawi Cotton Company Limited is a subsidiary of China-Africa Cotton Development Limited

Perception of processors on cotton by-products

2.4 Policy environment

• Recruiting more smallholder farmers;

• Investing in irrigation infrastructure;

• Recruiting larger agricultural organisations such as Press Agriculture Limited.

The Malawi Bureau of Standards (MBS) is a statutory organization established in 1972 by an

Figure 1: Malawi cotton production trends by Agricultural Development

Blantyre Karonga Salima Shire Valley Machinga Total

3.2 Cotton yields

3.3 Extension services

Table 1: Challenges faced in cotton production reported by survey

3.4 Analysis of seed cotton market

• Specifying the quantity of seed cotton for production;

• Registering farmers through clubs 8 willing to grow cotton;

• Signing production contracts with farmers;

• Buying seed cotton from allocated zones only.

Figure 3: Ngara ADMARC Ginnery in Karonga

ADMARC 150,000 2,800

Afrisian Limited Company 30,000 5,576

Malawi Cotton Company Limited 30,000 1,031

Total 210,000 9,408

3.5 Seed cotton minimum price formula

3.6 Overview of cotton sector financing and role of

3.7 COVID-19 and cotton production

4.1 Cotton seed oil

Source: Baffes (2010)

Analysis of market for cotton seed oil

Stakeholder analysis relative to oil by-products

Figure 5: Stakeholder analysis of the edible oil sector

•Their priority is business profitability through edible oil business on

•They seek to maximize profits from cotton seed.

•They may earn extra income from cotton seed.

•Provides cotton seed regulatory framework.

4.2 Cotton cake

United States Mexico

Stakeholder analysis relative to cake by-products

Figure 6: Stakeholder analysis of the cotton oil cake sector

• They seek profitability from cotton cake marketing on domestic and

• They may earn extra income from cotton seed.